uMfolozi Municipality Annual financial statements for the year ended
uMfolozi Municipality Annual financial statements for the year ended 30 June 2016
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
General Information Legal form of entity
Munipality
Executive Committee Mayor
. SW Mgenge ME Ntshangase BT Mnqayi FPB Mpungose FM Thusi SK Ngema
Grading of local authority
1
Accounting Officer
KE Gamede
Chief Financial Officer
JV Nkosi
Registered office
25 Bredelia Street Kwa-Mbonambi 3915
Postal address
P.O Box 96 Kwa-Mbonambi 3915
Bankers
ABSA Bank
Auditors
Auditor General South Africa
Telephone
(035) 580-1421
Fax Number
(035) 580-1141
E-mail Address ( Accounting Officer)
[email protected]
1
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Index The reports and statements set out below comprise the annual financial statements presented to the Council: Index
Page
Accounting Officer's Responsibilities and Approval
3
Report of the Auditor General
4
Statement of Financial Position
5
Statement of Financial Performance
6
Statement of Changes in Net Assets
7
Statement of Cash Flows
8
Statement of Comparison of Budgets and Actual Amount
9 - 11
Accounting Policies
12 - 25
Notes to the Annual Financial Statements
26 - 43
Appendixes:Unaudited Supplimentary Schedules Appendix B: Analysis of Property, Plant and Equipment
44
Appendix D: Segmental Statement of Financial Performance
50
2
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Officer's Responsibilities and Approval The accounting officer is required by the Municipal Finance Management Act (Act 56 of 2003), to maintain adequate accounting records and is responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is the responsibility of the accounting officer to ensure that the annual financial statements fairly present the state of affairs of the municipality as at the end of the financial year and the results of its operations and cash flows for the period then ended. The external auditors are engaged to express an independent opinion on the annual financial statements and was given unrestricted access to all financial records and related data. The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. The annual financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. The accounting officer acknowledges that he is ultimately responsible for the system of internal financial control established by the municipality and place considerable importance on maintaining a strong control environment. To enable the accounting officer to meet these responsibilities, the accounting officer sets standards for internal control aimed at reducing the risk of error or deficit in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the municipality and all employees are required to maintain the highest ethical standards in ensuring the municipality’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the municipality is on identifying, assessing, managing and monitoring all known forms of risk across the municipality. While operating risk cannot be fully eliminated, the municipality endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The accounting officer is of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or deficit. The accounting officer has reviewed the municipality’s cash flow forecast for the year to 30 June 2017 and, in the light of this review and the current financial position, he is satisfied that the municipality has or has access to adequate resources to continue in operational existence for the foreseeable future. The municipality is wholly dependent on the grants for continued funding of operations. The annual financial statements are prepared on the basis that the municipality is a going concern and that the municipality has neither the intention nor the need to liquidate or curtail materially the scale of the municipality. The external auditors are responsible for independently auditing and reporting on the municipality's annual financial statements. The annual financial statements have been examined by the municipality's external auditors and their report is presented on page 4. The annual financial statements set out on pages 5 to 43, which have been prepared on the going concern basis, were approved by the accounting officer on 31 August 2016 and were signed on its behalf by:
KE Gamede Municipal Manager
3
Report of the Auditor General To the Council of uMfolozi Local Municipality
Report on the financial statements I have audited the accompanying annual financial statements of the uMfolozi Municipality which comprise the statement of financial position as at 30 June 2016, statement of financial performance, statement of changes in net assets and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes, and the accounting officer’s report, as set out on pages 5 to 43.
__________________________________
4
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Statement of Financial Position as at 30 June 2016 Figures in Rand
Note(s)
2016
2015
Assets Current Assets Receivables from Non-Exchange Transactions Other Receivables from non-exchange transactions VAT receivable Cash and cash equivalents
4 6 7 8
Non-Current Assets Property, plant and equipment Intangible assets
2 3
Total Assets
10 802 592 80 579 3 099 196 210 604
8 202 673 92 211 3 956 920 3 188 448
14 192 971
15 440 252
183 948 794 11 577
140 957 142 44 170
183 960 371
141 001 312
198 153 342
156 441 564
1 278 980 25 163 685 5 564 291
1 702 219 18 929 593 4 765 287
32 006 956
25 397 099
2 979 386
3 360 993
34 986 342
28 758 092
163 167 000
127 683 472
163 167 000
127 683 472
Liabilities Current Liabilities Finance lease obligation Payables from exchange transactions Unspent conditional grants and receipts
10 12&13 11
Non-Current Liabilities Finance lease obligation
10
Total Liabilities Net Assets Accumulated surplus
* See Note
5
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Statement of Financial Performance Figures in Rand
Note(s)
2016
2015
312 222 141 714 294 490 357 505 168 850 1 862 232
278 715 111 175 725 789 534 680 212 652 1 559 564
3 137 013
3 422 575
14
6 857 475
6 490 400
16
141 600 993 4 153 664
122 591 586 10 050 097
Total revenue from non-exchange transactions
152 612 132
139 132 083
Total revenue
155 749 145
142 554 658
Revenue Revenue from exchange transactions Service charges Rental of facilities and equipment Licences and permits Miscelleneous income Sale of tender documents Interest received
15
21
Total revenue from exchange transactions Revenue from non-exchange transactions Taxation revenue Property rates Transfer revenue Government Grants Fines
Expenditure Employee related costs Remuneration of councillors Depreciation and amortisation Impairment loss/ Reversal of impairments Finance costs Provision for Bad debts movements Repairs and maintenance Contracted services Grants expenditures General Expenses
18 19 22 23 24 20 27 26 17
Total expenditure
(27 306 911) (8 438 896) (6 323 762) (9 469) (332 461) (3 761 888) (5 154 457) (2 724 150) (11 565 399) (54 648 224)
(23 467 008) (7 919 293) (4 591 945) (40 185) (309 603) (9 495 363) (1 190 360) (2 178 153) (5 809 770) (41 409 111)
(120 265 617) (96 410 791)
Operating surplus Loss on disposal of assets
35 483 528 -
46 143 867 (56 245)
Surplus for the year
35 483 528
46 087 622
* See Note
6
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Statement of Changes in Net Assets Accumulated surplus
Figures in Rand Balance at 01 July 2014 Changes in net assets Surplus for the year Total changes Balance at 01 July 2015 Changes in net assets Surplus for the year Total changes Balance at 30 June 2016
* See Note
7
Total net assets
81 595 850
81 595 850
46 087 622
46 087 622
46 087 622
46 087 622
127 683 472
127 683 472
35 483 528
35 483 528
35 483 528
35 483 528
163 167 000
163 167 000
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Statement of Cash Flows Figures in Rand
Note(s)
2016
2015
Cash flows from operating activities Receipts Sale of goods and services Grants Interest income Other receipts
1 389 339 141 939 000 1 862 232 483 903
4 785 676 117 422 003 1 559 564 1 059 302
145 674 474
124 826 545
(35 749 677) (62 473 045) (20 302)
(31 194 882) (42 714 829) (9 970)
(98 243 024)
(73 919 681)
28
47 431 450
50 906 864
2 2
(48 470 546) (821 744) -
(46 456 938) (3 755 884) 144 737
Payments Employee costs Suppliers Finance costs
Net cash flows from operating activities Cash flows from investing activities Purchase of property, plant and equipment Increase in Finance Leases Proceeds from sale of Asset Net cash flows from investing activities
(49 292 290) (50 068 085)
Cash flows from financing activities Finance lease payments Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year 8
Cash and cash equivalents at the end of the year
* See Note
8
(1 117 004)
2 193 765
(2 977 844) 3 188 448
3 032 544 155 904
210 604
3 188 448
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Statement of Comparison of Budgets and Actual Amounts Figures in Rand
Original budget
Budget Final adjustments adjustments (i.t.o. s28 and budget s31 of the MFMA)
Shifting of funds (i.t.o. s31 of the MFMA)
Virement Final budget (i.t.o. council approved policy)
Actual outcome
Unauthorised Variance expenditure
Actual outcome as % of final budget
Actual outcome as % of original budget
2016 Financial Performance Property rates Service charges Investment revenue Transfers recognised operational Other own revenue Total revenue (excluding capital transfers and contributions) Employee costs Remuneration of councillors Debt impairment Depreciation and asset impairment Finance charges Transfers and grants Other expenditure Total expenditure Surplus/(Deficit)
5 367 840 313 376 463 400 98 420 000 27 053 384 131 618 000
(31 595 912) (7 771 623) (450 000) (61 925 145) (101 742 680) 29 875 320
-
5 367 840 313 376 463 400 98 420 000
-
5 367 840 313 376 463 400 98 420 000
6 857 475 312 222 1 862 232 110 228 608
1 489 635 (1 154) 1 398 832 11 808 608
10 053 384
-
10 053 384
5 116 223
(4 937 161)
(17 000 000) 114 618 000
-
114 618 000
124 376 760
(17 000 000)
2 134 677 (67 026) (225 000) (1 842 971)
(29 461 235) (7 838 649)
-
-
-
(29 461 235) (7 838 649) -
% % % %
128 100 402 112
% % % %
51 %
19 %
109 %
94 %
(27 306 911) (8 438 896)
-
2 154 324 (600 247)
93 % 108 %
86 % 109 %
(3 761 888) (6 333 231)
-
(3 761 888) (6 333 231)
-% DIV/0 %
-% DIV/0 %
(675 000) (63 768 116)
-
-
(332 461) (11 565 399) (62 526 831)
-
(332 461) (10 890 399) 1 241 285
-% 1 713 % 98 %
-% 2 570 % 101 %
(320) (101 743 000)
-
- (101 743 000) (120 265 617)
-
(18 522 617)
118 %
118 %
(8 763 857)
32 %
14 %
(17 000 320)
12 875 000
-
(675 000) (63 768 116)
9 758 760
128 100 402 112
12 875 000
9
4 111 143
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Appropriation Statement Figures in Rand
Original budget
Transfers recognised capital
33 382 000
Surplus (Deficit) after capital transfers and contributions
63 257 320
Surplus/(Deficit) for the year
63 257 320
Budget Final adjustments adjustments (i.t.o. s28 and budget s31 of the MFMA) 6 155 000
Shifting of funds (i.t.o. s31 of the MFMA)
Virement Final budget (i.t.o. council approved policy)
Actual outcome
Unauthorised Variance expenditure
Actual outcome as % of final budget
Actual outcome as % of original budget
39 537 000
-
39 537 000
31 372 385
(8 164 615)
79 %
94 %
(10 845 320)
52 412 000
-
52 412 000
35 483 528
(16 928 472)
68 %
56 %
(10 845 320)
52 412 000
-
52 412 000
35 483 528
(16 928 472)
68 %
56 %
(10 845 320)
52 412 000
-
52 412 000
104 407 458
51 995 458
199 %
165 %
Capital expenditure and funds sources Total capital expenditure
63 257 320
10
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Appropriation Statement Figures in Rand
Original budget
Budget Final adjustments adjustments (i.t.o. s28 and budget s31 of the MFMA)
Shifting of funds (i.t.o. s31 of the MFMA)
Virement Final budget (i.t.o. council approved policy)
Actual outcome
Unauthorised Variance expenditure
Actual outcome as % of final budget
Actual outcome as % of original budget
Cash flows Net cash from (used) operating Net cash from (used) investing Net cash from (used) financing Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at year end
28 700 000
53 794 000
82 494 000
-
82 494 000
47 431 450
(35 062 550)
57 %
165 %
(44 082 000)
(2 175 000)
(46 257 000)
-
(46 257 000)
(49 292 290)
(3 035 290)
-%
-%
17 000 000
-
17 000 000
-
17 000 000
(1 117 004)
(18 117 004)
-%
-%
1 618 000
51 619 000
53 237 000
-
53 237 000
(2 977 844)
(56 214 844)
(6)%
(184)%
156 000
3 032 000
3 188 000
-
3 188 000
3 188 448
448
-%
2 044 %
1 774 000
54 651 000
56 425 000
-
56 425 000
210 604
56 214 396
-%
12 %
11
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.
Presentation of Annual Financial Statements
The Annual Financial Statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention unless specified otherwise. These Annual Financial Statements have been prepared in accordance with the Generally Recognised Accounting Practice (GRAP) issued by the Accounting Standards Board in accordance with Section 122(3) of the Municipal Finance Management Act, (Act No 56 of 2003). Accounting policies for material transaction, events or conditions not covered by the above GRAP Standards have been developed in accordance with paragraph 7,11 and 12 of GRAP 3.These accounting policies and the applicable disclosure been based on South African Statements of General Accepted Accounting Practices (SA GAAP) including any interpretation of such Statements issued by the Accounting Practise Board. 1.1 Presentation currency These annual financial statements are presented in South African Rand, which is the functional currency of the municipality. 1.2 Grap Standards Summary Applicable Standards GRAP 1 GRAP 2 GRAP 3 GRAP 5 GRAP 9 GRAP 13 GRAP 14 GRAP 16 GRAP 17 GRAP 19 GRAP 23 GRAP 24 GRAP 25 GRAP 31 GRAP 100 GRAP 104 IGRAP 1
-
Presentation of Financial Statement Cash Flow Statement Accounting Policies , Changes in Accounting Estimates and Errors Borrowing Costs Revenue from Exchange Transactions Leases Events After the Reporting Date Investment Properties Property, Plant and Equipment Provisions, Contingent Liabilities and Contingent Assets Revenue from Non-exchange Transactions Presentation of Budget Information in Financial Statements Employee Benefits Intangible Assets Non-current Assets Held for Sale and Discontinued Operations Financial Instruments Traffic fines
New Standards, Amendments and Interpretations to GRAP Standards Approved But Not yet Effective: GRAP 32 GRAP 108 IGRAP 17 GRAP 20 GRAP 109
Service Concession Arrangment : Grantor Statutory Receivables Service Concession Arrangements Where a Grantor Controls a Significant Residual Interest in an Asset. Related party disclosures Accounting by principals and agents
Unknown Effective date not approved Effective date not approved Effective date not approved Effective date not approved
1.3 Going Concern Assumption Basis These Annual Financial Statements have been prepared on the assumption that the municipality will continue to operate as a going concern for at least the next 12 months.
1.4 Significant judgements and sources of estimation uncertainty In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant judgements include:
12
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.4 Significant judgements and sources of estimation uncertainty (continued) Trade receivables / Held to maturity investments and/or loans and receivables The municipality assesses its trade receivables, held to maturity investments and loans and receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit, the surplus makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset. The impairment for trade receivables, held to maturity investments and loans and receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for national and industry-specific economic conditions and other indicators present at the reporting date that correlate with defaults on the portfolio. These annual loss ratios are applied to loan balances in the portfolio and scaled to the estimated loss emergence period. Impairment testing The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of valuein-use calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions. It is reasonably possible that the [name a key assumption] assumption may change which may then impact our estimations and may then require a material adjustment to the carrying value of goodwill and tangible assets. The municipality reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. In addition, goodwill is tested on an annual basis for impairment. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value in use of goodwill and tangible assets are inherently uncertain and could materially change over time. They are significantly affected by a number of factors including [list entity specific variables, i.e. production estimates, supply demand], together with economic factors such as [list economic factors such as exchange rates inflation interest]. Provisions Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 12 - Provisions. Post retirement benefits The present value of the post retirement obligation depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) include the discount rate. Any changes in these assumptions will impact on the carrying amount of post retirement obligations. The municipality determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the municipality considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. Other key assumptions for pension obligations are based on current market conditions. Additional information is disclosed in Note 9.
13
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.4 Significant judgements and sources of estimation uncertainty (continued) Allowance for doubtful debts On debtors an impairment loss is recognised in surplus and deficit when there is objective evidence that it is impaired. The impairment is measured as the difference between the debtors carrying amount and the present value of estimated future cash flows discounted at the effective interest rate, computed at initial recognition. An impairment of trade receivables is accounted for by reducing the carrying amount of trade receivables through the use of an allowance account, and the amount of the loss is recognised in the Statement of Financial Performance within operating expenses. When a trade receivable is uncollectible, it is written off. Subsequent recoveries of amounts previously written off are credited against operating expenses in the Statement of Financial PerformanceAdditional text Provision for doubtful debts is calculated by categorising the outstanding into three: Category A are governement properties and those who owe less the 30 days. No provision is made forthem. Category B are those who irregular payers, and the debts is more then 60 days. The provision is made at 25% Category C are bad payers and the provision is at 50% 1.5 Property, plant and equipment Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used during more than one year. Items of property, plant and equipment are initially recognised as assets on acquisition date and are initially recorded at cost. The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by the municipality. Trade discounts and rebates are deducted in arriving at the cost. The cost also includes the necessary costs of dismantling and removing the asset and restoring the site on which it is located. When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Where an asset is acquired by the municipality for no or nominal consideration (i.e. a non-exchange transaction), the cost is deemed to be equal to the fair value of that asset on the date acquired. Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item's fair value was not determinable, it's deemed cost is the carrying amount of the asset's given up. Major spare parts and servicing equipment qualify as property, plant and equipment when the municipality expects to use them during more than one period. Similarly, if the major spare parts and servicing equipment can be used only in connection with an item of property, plant and equipment, they are accounted for as property, plant and equipment. Subsequent Measurement - Cost Model Subsequent to initial recognition, items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Land is not depreciated as it is deemed to have an indefinite useful life. Where the municipality replaces parts of an asset, it derecognises the part of the asset being replaced and capitalises the new component. Subsequent expenditure incurred on an asset is capitalised when it increases the capacity or future economic benefits associated with the asset. Depreciation Depreciation is calculated on the depreciable amount, using the straight-line method over the estimated useful lives of the assets. Components of assets that are significant in relation to the whole asset and that have different useful lives are depreciated separately. The annual depreciation rates are based on the following estimated average asset lives.
The useful lives of items of property, plant and equipment have been assessed as follows: 14
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.5 Property, plant and equipment (continued) Item Infrastructure Roads and paving Stormwater Drainage Community Buildings Recreational facilities Community Halls Parks and Gardens Libraries Equipment and furniture Office Equipment Furniture and fittings Bins and containers Specialised plant and equipment Other property, plant and equipment Buildings Specialised vehicles Other vehicles Other Emergency equipment Computer equipment Landfill Sites
Average useful life 30 20 30 20-30 30 30 30 4 7-10 5 10-15 30 10 5 15 7 15
The residual value, the useful life of an asset and the depreciation method is reviewed annually and any changes are recognised as a change in accounting estimate in the Statement of Financial Performance. The municipality tests for impairment where there is an indication that an asset may be impaired. An assessment of whether there is an indication of possible impairment is done at each reporting date. Where the carrying amount of an item of property, plant and equipment is greater than the estimated recoverable amount (or recoverable service amount), it is written down immediately to its recoverable amount (or recoverable service amount) and an impairment loss is charged to the Statement of Financial Performance. Derecognition Items of Property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset. The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying value and is recognised in the Statement of Financial Performance.
15
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.6 Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance. Examples include computer software, licenses, and development costs. The municipality recognises an intangible asset in its Statement of Financial Position only when it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the municipality and the cost or fair value of the asset can be measured reliably. Internally generated intangible assets are subject to strict recognition criteria before they are capitlised. Research expenditure is never capitalised, while development expenditure is only capitalised to the extent that: • • • •
the municipality intends to complete the intangible asset for use or sale; it is technically feasible to complete the intangible asset; the municipality has the resources to complete the project; and it is probable that the municipality will receive future economic benefits or service potential.
Intangible assets are initially recognised at cost. Where an intangible asset is acquired by the municipality for no or nominal consideration (i.e. a non-exchange transaction), the cost is deemed to be equal to the fair value of that asset on the date acquired. Where an intangible asset is acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item's fair value was not determinable, it's deemed cost is the carrying amount of the asset's given up Subsequent Measurement - Cost Model Intangible assets are subsequently carried at cost less accumulated amortisation and impairments. The cost of an intangible asset is amortised over the useful life where that useful life is finite. Where the useful life is indefinite, the asset is not amortised but is subject to an annual impairment test. Amortisation and Impairment Amortisation is charged so as to write off the cost or valuation of intangible assets over their estimated useful lives using the straight line method. The annual amortisation rates are based on the following estimated average asset lives. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at each reporting date and any changes are recognised as a change in accounting estimate in the Statement of Financial Performance. The municipality tests intangible assets with finite useful lives for impairment where there is an indication that an asset may be impaired. An assessment of whether there is an indication of possible impairment is done at each reporting date. Where the carrying amount of an item of an intangible asset is greater than the estimated recoverable amount (or recoverable service amount), it is written down immediately to its recoverable amount (or recoverable service amount) and an impairment loss is charged to the Statement of Financial Performance. Derecognition Intangible assets are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset. The gain or loss arising on the disposal or retirement of an intangible asset is determined as the difference between the sales proceeds and the carrying value and is recognised in the Statement of Performance. The annual amortisation rates are based on the following estimated average asset lives.
Item Computer software, other
Useful life 5 years
1.7 Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or a residual interest of another entity.
16
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.7 Financial instruments (continued) The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility. A concessionary loan is a loan granted to or received by an entity on terms that are not market related. Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Derecognition is the removal of a previously recognised financial asset or financial liability from an entity’s statement of financial position. A derivative is a financial instrument or other contract with all three of the following characteristics: Its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract (sometimes called the ‘underlying’). It requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors. It is settled at a future date. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, an entity shall estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment, call and similar options) but shall not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate (see the Standard of GRAP on Revenue from Exchange Transactions), transaction costs, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial instruments can be estimated reliably. However, in those rare cases when it is not possible to reliably estimate the cash flows or the expected life of a financial instrument (or group of financial instruments), the entity shall use the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments). Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction. A financial asset is: cash; a residual interest of another entity; or a contractual right to: receive cash or another financial asset from another entity; or exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity. A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. A financial liability is any liability that is a contractual obligation to: deliver cash or another financial asset to another entity; or exchange financial assets or financial liabilities under conditions that are potentially unfavourable to the entity. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
17
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.7 Financial instruments (continued) Liquidity risk is the risk encountered by an entity in the event of difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Loan commitment is a firm commitment to provide credit under pre-specified terms and conditions. Loans payable are financial liabilities, other than short-term payables on normal credit terms. Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. A financial asset is past due when a counterparty has failed to make a payment when contractually due. A residual interest is any contract that manifests an interest in the assets of an entity after deducting all of its liabilities. A residual interest includes contributions from owners, which may be shown as: equity instruments or similar forms of unitised capital; a formal designation of a transfer of resources (or a class of such transfers) by the parties to the transaction as forming part of an entity’s net assets, either before the contribution occurs or at the time of the contribution; or a formal agreement, in relation to the contribution, establishing or increasing an existing financial interest in the net assets of an entity. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability. An incremental cost is one that would not have been incurred if the entity had not acquired, issued or disposed of the financial instrument. Financial instruments at amortised cost are non-derivative financial assets or non-derivative financial liabilities that have fixed or determinable payments, excluding those instruments that: the entity designates at fair value at initial recognition; or are held for trading. Financial instruments at cost are investments in residual interests that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured. Financial instruments at fair value comprise financial assets or financial liabilities that are: derivatives; combined instruments that are designated at fair value; instruments held for trading. A financial instrument is held for trading if: it is acquired or incurred principally for the purpose of selling or repurchasing it in the near-term; or on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short term profit-taking; non-derivative financial assets or financial liabilities with fixed or determinable payments that are designated at fair value at initial recognition; and financial instruments that do not meet the definition of financial instruments at amortised cost or financial instruments at cost. Initial recognition The entity recognises a financial asset or a financial liability in its statement of financial position when the entity becomes a party to the contractual provisions of the instrument. The entity recognises financial assets using trade date accounting.
18
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.7 Financial instruments (continued) Initial measurement of financial assets and financial liabilities The entity measures a financial asset and financial liability initially at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. The entity measures a financial asset and financial liability initially at its fair value [if subsequently measured at fair value]. The entity first assesses whether the substance of a concessionary loan is in fact a loan. On initial recognition, the entity analyses a concessionary loan into its component parts and accounts for each component separately. The entity accounts for that part of a concessionary loan that is: a social benefit in accordance with the Framework for the Preparation and Presentation of Financial Statements, where it is the issuer of the loan; or non-exchange revenue, in accordance with the Standard of GRAP on Revenue from Non-exchange Transactions (Taxes and Transfers), where it is the recipient of the loan. 1.8 Leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. When a lease includes both land and buildings elements, the entity assesses the classification of each element separately. Finance leases - lessor The municipality recognises finance lease receivables as assets on the statement of financial position. Such assets are presented as a receivable at an amount equal to the net investment in the lease. Finance revenue is recognised based on a pattern reflecting a constant periodic rate of return on the municipality’s net investment in the finance lease. Finance leases - lessee Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease. Minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of on the remaining balance of the liability. Any contingent rents are expensed in the period in which they are incurred. Operating leases - lessor Operating lease revenue is recognised as revenue on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease revenue. The aggregate cost of incentives is recognised as a reduction of rental revenue over the lease term on a straight-line basis. The aggregate benefit of incentives is recognised as a reduction of rental expense over the lease term on a straight-line basis. Income for leases is disclosed under revenue in statement of financial performance.
19
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.8 Leases (continued) Operating leases - lessee Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability. 1.9 Employee benefits Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees. A qualifying insurance policy is an insurance policy issued by an insurer that is not a related party (as defined in the Standard of GRAP on Related Party Disclosures) of the reporting entity, if the proceeds of the policy can be used only to pay or fund employee benefits under a defined benefit plan and are not available to the reporting entity’s own creditors (even in liquidation) and cannot be paid to the reporting entity, unless either: the proceeds represent surplus assets that are not needed for the policy to meet all the related employee benefit obligations; or the proceeds are returned to the reporting entity to reimburse it for employee benefits already paid. Termination benefits are employee benefits payable as a result of either: an entity’s decision to terminate an employee’s employment before the normal retirement date; or an employee’s decision to accept voluntary redundancy in exchange for those benefits. Other long-term employee benefits are employee benefits (other than post-employment benefits and termination benefits) that are not due to be settled within twelve months after the end of the period in which the employees render the related service. Vested employee benefits are employee benefits that are not conditional on future employment. Composite social security programmes are established by legislation and operate as multi-employer plans to provide postemployment benefits as well as to provide benefits that are not consideration in exchange for service rendered by employees. A constructive obligation is an obligation that derives from an entity’s actions where by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities and as a result, the entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities.
20
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.9 Employee benefits (continued) Short-term employee benefits Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within twelve months after the end of the period in which the employees render the related service. Short-term employee benefits include items such as: wages, salaries and social security contributions; short-term compensated absences (such as paid annual leave and paid sick leave) where the compensation for the absences is due to be settled within twelve months after the end of the reporting period in which the employees render the related employee service; bonus, incentive and performance related payments payable within twelve months after the end of the reporting period in which the employees render the related service; and non-monetary benefits (for example, medical care, and free or subsidised goods or services such as housing, cars and cellphones) for current employees. When an employee has rendered service to the entity during a reporting period, the entity recognise the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service: as a liability (accrued expense), after deducting any amount already paid. If the amount already paid exceeds the undiscounted amount of the benefits, the entity recognise that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and as an expense, unless another Standard requires or permits the inclusion of the benefits in the cost of an asset. The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs. The entity measure the expected cost of accumulating compensated absences as the additional amount that the entity expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The entity recognise the expected cost of bonus, incentive and performance related payments when the entity has a present legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made. A present obligation exists when the entity has no realistic alternative but to make the payments.
21
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.10 Provisions and contingencies Provisions are recognised when the municipality has a present or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the provision can be made. Provisions are reviewed at reporting date and adjusted to reflect the current best estimate. Where the effect is material, non-current provisions are discounted to their present value using a pre-tax discount rate that reflects the market's current assessment of the time value of money, adjusted for risks specific to the liability (for example in the case of obligations for the rehabilitation of land). The municipality does not recognise a contingent liability or contingent asset. A contingent liability is disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is disclosed where an inflow of economic benefits is probable. Future events that may affect the amount required to settle an obligation are reflected in the amount of a provision where there is sufficient objective evidence that they will occur. Gains from the expected disposal of assets are not taken into account in measuring a provision. Provisions are not recognised for future operating losses. The present obligation under an onerous contract is recognised and measured as a provision. A provision for restructuring costs is recognised only when the following criteria over and above the recognition criteria of a provision have been met: (a) The municipality has a detailed formal plan for the restructuring identifying at least: - the business or part of a business concerned; - the principal locations affected; - the location, function, and approximate number of employees who will be compensated for terminating their services; - the expenditures that will be undertaken; and - when the plan will be implemented; and (b) The municipality has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it. No obligation arises as a consequence of the sale or transfer of an operation until the municipality is committed to the sale or transfer, that is, there is a binding arrangement. After their initial recognition contingent liabilities recognised in entity combinations that are recognised separately are subsequently measured at the higher of: >the amount that would be recognised as a provision; and >the amount initially recognised less cumulative amortisation. Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 31.
1.11 Revenue from exchange transactions Revenue from exchange transactions refers to revenue that accrued to the municipality directly in return for services rendered / goods sold, the value of which approximates the consideration received or receivable. Service charges relating to refuse removal are recognised on a monthly basis in arrears by applying the approved tariff to each property that has improvements. Tariffs are determined per category of property usage, and are levied monthly based on the recorded number of refuse containers per property. Interest revenue is recognised on a time proportion basis. Revenue from the rental of facilities and equipment is recognised on a straight-line basis over the term of the lease agreement. Revenue arising from the application of the approved tariff of charges is recognised when the relevant service is rendered by applying the relevant gazetted tariff. This includes the issuing of licenses and permits. Revenue from the sale of goods is recognised when substantially all the risks and rewards in those goods is passed to the consumer.
22
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.11 Revenue from exchange transactions (continued) Measurement Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates. Sale of goods Revenue from the sale of goods is recognised when all the following conditions have been satisfied: the municipality has transferred to the purchaser the significant risks and rewards of ownership of the goods; the municipality retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue can be measured reliably; it is probable that the economic benefits or service potential associated with the transaction will flow to the municipality; and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Rendering of services When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the reporting date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: the amount of revenue can be measured reliably; it is probable that the economic benefits or service potential associated with the transaction will flow to the municipality; the stage of completion of the transaction at the reporting date can be measured reliably; and the costs incurred for the transaction and the costs to complete the transaction can be measured reliably. When services are performed by an indeterminate number of acts over a specified time frame, revenue is recognised on a straight line basis over the specified time frame unless there is evidence that some other method better represents the stage of completion. When a specific act is much more significant than any other acts, the recognition of revenue is postponed until the significant act is executed. When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable. Service revenue is recognised by reference to the stage of completion of the transaction at the reporting date. Stage of completion is determined by services performed to date as a percentage of total services to be performed. 1.12 Revenue from non-exchange transactions Revenue from non-exchange transactions refers to transactions where the municipality received revenue from another entity without directly giving approximately equal value in exchange. Revenue from non-exchange transactions is generally recognised to the extent that the related receipt or receivable qualifies for recognition as an asset and there is no liability to repay the amount. Revenue from property rates is recognised when the legal entitlement to this revenue arises. Collection charges are recognised when such a mounts are legally enforceable. Penalty interest on unpaid rates is recognised on a time proportionate basis. Revenue from public contributions and donations is recognised when all conditions associated with the contribution have been met or where the contribution is to finance property, plant and equipment, when such items of property, plant and equipment qualifies for recognition and first becomes available for use by the municipality. Where public contributions have been received but the municipality has not met the related conditions, a deferred income (liability) is recognised.Contributed property, plant and equipment is recognised when such items of property, plant and equipment qualifies for recognition and become available for use by the municipality. Revenue from the recovery of unauthorised, irregular, fruitless and wasteful expenditure is based on legislated procedures, including those set out in the Municipal Finance Management Act (Act No.56 of 2003) and is recognised when the recovery thereof from the responsible Councilors or officials is virtually certain.
23
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.12 Revenue from non-exchange transactions (continued) Fines Revenue from the issuing of fines is recognised when: it is probable that the economic benefits or service potential associated with the transaction will flow to the municipality; and the amount of the revenue can be measured reliably. The municipality has one type of fines:namely traffic fines. There is certainty regarding the probability of the flow of economic benefits or service potential in respect of fines as these fines are usually not given directly to an offender. Further legal processes have to be undertaken before the fine is enforceable. In respect of summonses the public prosecutor can decide whether to waive the fine, reduce it or prosecute for non-payment by the offender. An estimate is made for the revenue amount collected from fines and summonses based on past experience of amounts collected. Where a reliable estimate cannot be made of revenue from summonses, the revenue from summonses is recognised when the public prosecutor pays over to the entity the cash actually collected on summonses issued. Grants, Transfers and Donations Grants, transfers and donations received or receivable are recognised when the resources that have been transferred meet the criteria for recognition as an asset. A corresponding liability is raised to the extent that the grant, transfer or donation is conditional. The liability is transferred to revenue as and when the conditions attached to the grant are met. Grants without any conditions attached are recognised as revenue when the asset is recognised. 1.13 Investment income Investment income is recognised on a time-proportion basis using the effective interest rate method. 1.14 Retirement Benefits Post Retirement The municipality provides retirement benefits for its Employees and Councillors. Contributions are made to the Natal Joint Municipal Pension Fund to fund the obligations for the payment of retirement benefits in accordance with the rules of the defined benefit funds it administers. Contributions are recognised as an expense in the statement of Financial Performance. The funds are actuarially valued every three years using the discounted cash flow method. Any deficits identified by the actuary are recovered from participating municipalities in the form of surcharges added to the contributions which are recognised as an expense in the statement of Financial Performance in the year that they become payable.
1.15 Comparative figures Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year. 1.16 Unauthorised expenditure Unauthorised expenditure is expenditure that has not been budgeted, expenditure that is not in terms of the conditions of an allocation received from another sphere of government, municipality or organ of state and expenditure in the form of a grant that is not permitted in terms of the Municipal Finance Management Act (Act No.56 of 2003). Unauthorised expenditure is accounted for as an expense in the Statement of Financial Performance and where recovered, it is subsequently accounted for as revenue in the Statement of Financial Performance. 1.17 Fruitless and wasteful expenditure Fruitless and wasteful expenditure is expenditure that was made in vain and would have been avoided had reasonable care been exercised. Fruitless and wasteful expenditure is accounted for as expenditure in the Statement of Financial Performance and where recovered, it is subsequently accounted for as revenue in the Statement of Financial Performance.
24
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.18 Irregular expenditure Irregular expenditure is expenditure that is contrary to the Municipal Finance Management Act (Act No.56 of 2003), the Municipal Systems Act (Act No.32 of 2000), the Public Office Bearers Act (Act No. 20 of 1998) or is in contravention of the Municipality’s supply chain management policy. Irregular expenditure excludes unauthorised expenditure. Irregular expenditure is accounted for as expenditure in the Statement of Financial Performance and where recovered, it is subsequently accounted for as revenue in the Statement of Financial Performance. 1.19 Conditional grants and receipts Revenue received from conditional grants, donations and funding are recognised as revenue to the extent that the municipality has complied with any of the criteria, conditions or obligations embodied in the agreement. To the extent that the criteria, conditions or obligations have not been met a liability is recognised. 1.20 Budget information Municipality are typically subject to budgetary limits in the form of appropriations or budget authorisations (or equivalent), which is given effect through authorising legislation, appropriation or similar.The budget covers the period from 1 July 2015 to 30 June 2016. General purpose financial reporting by municipality shall provide information on whether resources were obtained and used in accordance with the legally adopted budget. The annual financial statements and the budget are on the same basis of accounting therefore a comparison with the budgeted amounts for the reporting period have been included in the Statement of comparison of budget and actual amounts. The Statement of comparative and actual information has been included in the annual financial statements as the recommended disclosure when the annual financial statements and the budget are on the same basis of accounting as determined by National Treasury. 1.21 Related parties The municipality operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only entities within the national sphere of government are considered to be related parties. Management are those persons responsible for planning, directing and controlling the activities of the municipality, including those charged with the governance of the municipality in accordance with legislation, in instances where they are required to perform such functions. Close members of the family of a person are considered to be those family members who may be expected to influence, or be influenced by, that management in their dealings with the municipality. Only transactions with related parties not at arm’s length or not in the ordinary course of business are disclosed. 1.22 Cash and cash equivalents Cash and cash equivalents are measured at amortised cost. Cash includes cash on hand and cash with banks. Cash equivalents are short-term highly liquid investments that are held with registered banking institutions with maturities of three months or less and are subject to an insignificant risk of change in value. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and deposits held on call with banks
25
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand 2.
2016
2015
Property, plant and equipment 2016 Cost / Valuation
Land Buildings Leased office equipment Leased motor vehicles Infrastructure Community Other property, plant and equipment Work in progress Total
10 404 853 7 902 206 1 174 322 6 794 803 50 893 237 71 288 073 9 288 957 72 418 439 230 164 890
2015
Accumulated Carrying value depreciation and accumulated impairment (4 051 202) (992 425) (2 548 197) (13 099 241) (18 038 608) (7 486 423)
Cost / Valuation
10 404 853 3 851 004 181 897 4 246 606 37 793 996 53 249 465 1 802 534
10 404 853 7 385 974 1 174 323 5 973 059 29 880 140 62 052 394 8 533 433
72 418 439
55 468 424
(46 216 096) 183 948 794
180 872 600
-
26
Accumulated Carrying value depreciation and accumulated impairment (3 812 289) (734 111) (1 216 703) (11 433 331) (15 701 136) (7 017 888) -
10 404 853 3 573 685 440 212 4 756 356 18 446 809 46 351 258 1 515 545 55 468 424
(39 915 458) 140 957 142
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand 2.
Property, plant and equipment (continued)
Reconciliation of property, plant and equipment - 2016 Opening balance 10 404 853 3 573 685 440 213 4 756 356 18 446 809 46 351 258 1 515 544 55 468 424
Land Buildings Leased office equipment Leased motor vehicles Infrastructure Community Other property, plant and equipment Work in progress
140 957 142
Additions 516 232 821 744 755 523 47 198 791
Transfers
Depreciation
21 013 096 9 235 680 (30 248 776)
49 292 290
-
(238 911) (258 314) (1 331 494) (1 665 909) (2 337 471) (459 066) (6 291 165)
Impairment loss
(9 469) -
Total 10 404 853 3 851 006 181 899 4 246 606 37 793 996 53 249 467 1 802 532 72 418 439
(9 469) 183 948 798
Reconciliation of property, plant and equipment - 2015
Land Buildings Leased office equipment Leased motor vehicles Infrastructure Community Other property, plant and equipment Work in progress
Opening balance 10 404 853 3 811 182 675 077 1 884 324 14 501 219 34 827 945 1 982 683 27 457 555
Additions
Disposals
3 755 883 370 040 46 086 898
(200 982) -
95 544 838
50 212 821
(200 982)
A register containing the information required by section 63 of the Municipal Finance Management Act is available for inspection at the registered office of the municipality.
27
Transfers
Depreciation
4 794 904 13 281 125 (18 076 029) -
(237 497) (234 864) (883 851) (849 314) (1 757 812) (596 012) (4 559 350)
Impairment loss
(40 185) -
Total 10 404 853 3 573 685 440 213 4 756 356 18 446 809 46 351 258 1 515 544 55 468 424
(40 185) 140 957 142
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand 3.
2016
2015
Intangible assets 2016 Cost / Valuation
Computer software, other
2015
Accumulated Carrying value amortisation and accumulated impairment
162 978
(151 401)
11 577
Cost / Valuation
Accumulated Carrying value amortisation and accumulated impairment
162 978
(118 808)
44 170
Reconciliation of intangible assets - 2016
Computer software, other
Opening Amortisation balance 44 172 (32 595)
Total
Opening Amortisation balance 76 767 (32 595)
Total
11 577
Reconciliation of intangible assets - 2015
Computer software, other 4.
44 172
Receivables from Non-Exchange Transactions
Trade debtors Provision for Doubtful debts
12 198 805 (1 396 213)
9 522 137 (1 319 464)
10 802 592
8 202 673
1 891 403 80 288
1 854 236 37 167
1 971 691
1 891 403
Gross balances Rates
12 198 805
9 522 137
Less: Allowance for impairment Rates
(1 396 213)
(1 319 464)
Net balance Rates
10 802 592
8 202 673
Included in above is receivables from non-exchange transactions (taxes and transfers) Rates
12 198 805
9 522 137
12 198 805
9 522 137
Reconciliation of provision for doubtful debts of trade and other receivables Opening balance Provision for impairment
5.
Summary of Receivables
Gross balance
28
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand 5.
2016
2015
Summary of Receivables (continued)
Rates Current (0 -30 days) 31 - 60 days 61 - 90 days 91 - 120 days 121 - 365 days
521 419 339 503 218 314 308 529 10 811 040
606 874 483 652 431 870 297 890 7 701 851
12 198 805
9 522 137
Consumers Current (0 -30 days) 31 - 60 days 61 - 90 days 91 - 120 days 121 - 365 days
92 767 70 873 41 909 56 529 1 839 497
184 961 123 518 84 226 74 886 1 963 496
Less: Allowance for impairment
2 101 575 (716 575)
2 431 087 (887 827)
Summary of debtors by customer classification
1 385 000
1 543 260
Industrial/ commercial Current (0 -30 days) 31 - 60 days 61 - 90 days 91 - 120 days 121 - 365 days
225 763 68 132 44 692 53 947 1 798 660
222 227 173 173 165 752 43 389 904 336
Less: Allowance for impairment
2 191 194 (679 638)
1 508 877 (431 637)
1 511 556
1 077 240
202 889 200 499 131 711 198 054 7 172 882
199 686 186 961 181 891 179 615 4 834 019
7 906 035
5 582 172
Total Current (0 -30 days) 31 - 60 days 61 - 90 days 91 - 120 days 121 - 365 days
521 419 339 503 218 314 308 529 10 811 040
606 874 483 652 431 870 297 890 7 701 851
Less: Allowance for impairment
12 198 805 (1 396 213)
9 522 137 (1 319 464)
National and provincial government Current (0 -30 days) 31 - 60 days 61 - 90 days 91 - 120 days 121 - 365 days
10 802 592
29
8 202 673
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand 6.
2016
Other Receivables from non-exchange transactions
Sundry Debtors Traffic fines Allowance for impairment
7.
2015
596 907 3 740 750 (4 257 078)
605 000 9 554 513 (10 067 302)
80 579
92 211
3 099 196
3 956 920
202 483 8 121
3 159 025 29 423
210 604
3 188 448
VAT receivable
VAT VAT output is payable on the receipts basis and VAT input is paid over to SARS only once the payment is made to the supplier. 8.
Cash and cash equivalents
Cash and cash equivalents consist of: Cash and Bank Traffic Fines Account and Grant Cash Accounts
The municipality had the following bank accounts `
Account number / description ABSA BANK -Account TypeCheque-40-5385-7155 ABSA BANK -Account TypeTraffic 40-7854-4599 ABSA BANK - Account Type INEG-92-8652-5057 ABSA BANK - Account Type MIG-92-8651-3913 ABSA BANK - Account Type EPWP-92-8651-3769 ABSA BANK - Account Type FMG-92-8652-5340 ABSA BANK - Account Type MSIG-92-8651-3028 ABSA BANK - Account Type Call Account - 91-0739-9765 ABSA BANK -Account TypeTraffic 40-6506-2322 Total
Bank statement balances Cash book balances 30 June 2016 30 June 2015 30 June 2014 30 June 2016 30 June 2015 30 June 2014 200 983 3 160 220 134 126 202 483 3 159 025 131 429 167
12 394
14 090
167
12 384
14 090
1 920
1 815
1 178
1 920
1 815
1 178
1 509
1 427
1 357
1 509
1 427
1 357
1 077
1 964
2 819
1 077
1 964
2 819
1 211
1 146
1 151
1 211
1 146
1 151
1 367
1 292
1 449
1 367
1 292
1 449
-
-
2 431
-
-
2 431
870
9 385
-
870
9 385
-
209 104
3 189 643
158 601
210 604
3 188 438
155 904
30
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
Minimum lease payments due - within one year - in second to fifth year inclusive
1 612 532 3 390 880
2 092 152 3 905 017
less: future finance charges
5 003 412 (745 047)
5 997 169 (933 958)
9.
Employee benefit obligations
10. Finance lease obligation
Present value of minimum lease payments Present value of minimum lease payments due - within one year - in second to fifth year inclusive
Non-current liabilities Current liabilities
4 258 365
5 063 211
1 278 980 2 979 385
1 702 219 3 360 992
4 258 365
5 063 211
2 979 385 1 278 980
3 360 992 1 702 219
4 258 365
5 063 211
600 000 1 431 956 301 611 172 498 3 001 226 57 000
835 385 600 000 1 766 956 137 186 495 644 112 018 172 498 30 000 615 600
5 564 291
4 765 287
It is municipality policy to lease certain equipment and motor vehicles and equipment under finance leases. The average lease term was 5 years and the average effective borrowing rate was 10% (2015: 9%). Interest rates are fixed at the contract date. All leases have fixed repayments and no arrangements have been entered into for contingent rent. The municipality's obligations under finance leases are secured by the lessor's charge over the leased assets. . 11. Unspent conditional grants and receipts Unspent conditional grants and receipts comprises of: Unspent conditional grants and receipts Municipal Infrastructure Grant Spatial Development Framework Funding Housing Grant Library Grant Beach Access Upgrade Intergrated Development Plan Grant Development Planning and Shared Services Small Town Rehabilitation Schemes support programme
Movement during the year Balance at the beginning of the year Additions during the year Income recognition during the year
4 765 287 9 934 870 142 399 997 117 422 003 (141 600 993) (122 591 586) 5 564 291
31
4 765 287
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
11. Unspent conditional grants and receipts (continued) The nature and extent of government grants recognised in the annual financial statements and an indication of other forms of government assistance from which the municipality has directly benefited; and Unfulfilled conditions and other contingencies attaching to government assistance that has been recognised. See note for reconciliation of grants from National/Provincial Government.
12. Provisions Reconciliation of provisions - 2016 Opening Balance Leave Accrual
1 191 509
Reversed during the year (4 541)
Total
Additions
Total
1 186 968
Reconciliation of provisions - 2015
Leave Accrual
Opening Balance 1 000 090
191 419
1 191 509
13. Payables from exchange transactions Trade payables Other creditors Leave Accrual Retentions
14 388 484 1 462 560 1 186 968 8 125 673
11 989 387 706 113 1 191 509 5 042 584
25 163 685
18 929 593
1 075 018 239 253 148 289
416 932 124 425 164 756
1 462 560
706 113
Other creditors balance is made out of : Payroll Creditors Sundry Creditors Payment Received in Advance
The fair value of trade and other payables approximates their carrying amounts.
32
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
14. Property rates Rates received Property rates Less: Income forgone
10 970 780 (4 113 305)
10 399 564 (3 909 164)
6 857 475
6 490 400
193 868 000 95 165 000 141 833 000 42 250 000 588 256 000 122 209 000 7 213 000
193 868 000 95 165 000 141 833 000 42 250 000 588 256 000 122 209 000 7 213 000
Valuations Residential Commercial State Municipal (Ngonyama Trust) Agriculture Public Benefit Organisations Public Service Infrastructure
1 190 794 000 1 190 794 000 Valuations on land and buildings are performed every 4 years. The last general valuation came into effect on 1 July 2012. Interim valuations are processed on an annual basis to take into account changes in individual property values due to alterations and subdivisions. A general rate of 0.03611 is applied to property valuations to determine assessment rates. Rebates of 50% are granted to residential and state property owners. 15. Service charges Refuse removal
312 222
33
278 715
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
16. Government grants and subsidies Operating grants Equitable share Housing Grant Sports and Recreation Grant Municipal Systems Intergrated Grant Integrated Development Plan Grant Beach Access Upgrade Grant Small Town Rehabilitation Grant Library Grant Financial Management Grant Expanded Public Works Program Grant Intergrated National Electrification Grant Operational support for Thusong Schemes Support Programme Spatial Development Framework Funding ( SDF Funding) Capital grants Municipal Infrastructure Grant
93 949 000 335 000 930 000 112 018 194 033 28 774 860 186 1 800 000 1 000 000 9 000 000 1 460 997 558 600 -
67 324 724 247 528 934 000 323 689 240 000 559 710 1 800 000 1 455 000 5 113 096 6 539 003 239 400 198 821
110 228 608
84 974 971
31 372 385
37 616 615
31 372 385
37 616 615
141 600 993
122 591 586
Equitable Share In terms of the Constitution, this grant is used to subsidise the provision of basic services to indigent community members. All registered indigents receive a monthly subsidy of R 325 763- : which is funded from the grant. Municipal Infrastructure Grant Balance unspent at beginning of year Current-year receipts Conditions met - transferred to revenue Other
835 385 30 537 000 (31 372 385) -
6 198 724 38 452 000 (37 616 615) (6 198 724) 835 385
This grant was used to accelarate basic infrastructure backlogs for the benefit of poor households. The amount transfered to operating relates to projects budgeted for as capital and for financial reporting purposes the asset recognition criteria is met. The revenue recognised met the conditons of the grant. Financial Management Grant Current-year receipts Conditions met - transferred to revenue
1 800 000 (1 800 000) -
The grant was used to promote and support reforms in financial management through financial management internship and reforms programmes.The revenue recognised met the conditons of the grant.. Spatial Development Framework (SDF Funding) 34
1 800 000 (1 800 000) -
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
16. Government grants and subsidies (continued) Balance unspent at beginning of year Current-year receipts
600 000 -
600 000
600 000
600 000
1 766 956 (335 000)
1 766 956 -
Housing Grant Balance unspent at beginning of year Conditions met - transferred to revenue
1 431 956
1 766 956
This grant is unconditional and was used for human settlement operational expenses within the municipality (see note 11). Library Grant Balance unspent at beginning of year Current-year receipts Conditions met - transferred to revenue
137 186 723 000 (860 186) -
35 896 661 000 (559 710) 137 186
Conditions still to be met - remain liabilities (see note 11). Beach Access Upgrade Balance unspent at beginning of year Current-year receipts Conditions met - transferred to revenue
495 644 (194 033)
819 333 (323 689)
301 611
495 644
112 018 (112 018)
112 018 -
Conditions still to be met - remain liabilities (see note 11). Intergrated Development Planning Grant Balance unspent at beginning of year Conditions met - transferred to revenue
-
112 018
Conditions still to be met - remain liabilities (see note 11). Development Planning and Shared Services Balance unspent at beginning of year Conditions met - transferred to revenue
172 498 -
371 319 (198 821)
172 498
172 498
30 000 3 000 000 (28 774)
270 000 (240 000)
Conditions still to be met - remain liabilities (see note 11). Small Town Rehabilitation Grant Balance unspent at beginning of year Current-year receipts Conditions met - transferred to revenue 35
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
16. Government grants and subsidies (continued)
2015
3 001 226
30 000
Conditions still to be met - remain liabilities (see note 11). Intergrated National Electrification Grant Balance unspent at beginning of year Current-year receipts Conditions met - transferred to revenue
9 000 000 (9 000 000) -
113 096 5 000 000 (5 113 096) -
Conditions still to be met - remain liabilities (see note 11). The grant was used to address the electrification backlogs of occupied residential dwellings and the installation of bulk infrastructure, rehabilitation and refurbishment of electricity infrastructure in order to improve the quality of supply. The revenue recognised met the conditons of the grant. Municipal Systems Improvement Grant Current-year receipts Conditions met - transferred to revenue
930 000 (930 000) -
934 000 (934 000) -
Conditions still to be met - remain liabilities (see note 11). The grant was used for the implementation of revenue enhancement strategy, strengthening administrative systems for effective implementation of ward participation system, financial systems support and improving municipal audit outcome. The revenue recognised met the conditons of the grant.. Expanded Public Works Program Grant Current-year receipts Conditions met - transferred to revenue
1 000 000 (1 000 000) -
1 455 000 (1 455 000) -
The grant was used to expand employment creation efforts as a national priority through the use of labour intensive delivery methods within the municipality. The conditions of the grant were met. (see note 11). Operational Support Grant-Thusong Center Current-year receipts Conditions met - transferred to revenue Other
1 460 997 (1 460 997) -
4 000 000 2 539 003 (6 539 003) -
Conditions still to be met - remain liabilities (see note 11). Schemes Support Programs Grants Balance unspent at beginning of year Current-year receipts Conditions met - transferred to revenue
615 600 (558 600) 36
855 000 (239 400)
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
16. Government grants and subsidies (continued)
57 000
Conditions still to be met - remain liabilities (see note 11).
37
2015
615 600
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
17. General expenses Audit Committee Advertising Auditors remuneration Bank charges Cleaning Poverty Alleviation Internal Audit Fees Consulting and professional fees Consumables Publicity Donations Entertainment Mayoral Projects Stationery Insurance Community development and training Conferences and seminars Street Lighting Legal Fees Vehicles expenses Lease Rentals Traffic managers services Medical expenses Sampling Testing Fuel and oil Tools Postage and courier Printing and stationery Protective clothing Royalties and license fees Refreshments Staff welfare Subscriptions and membership fees Telephone and fax Training Travel - local Refuse Land usage management systems Electricity Sewerage and waste disposal Uniforms Archiving Community Services Relocation expenses Noise Pollutions and Disaster Funds HIV Awareness Development planning LED Expenses Grants and Donations Burials Sundries Civic Building Regulation
38
116 658 50 699 1 549 041 167 932 49 446 1 135 711 2 098 773 11 449 843 43 166 4 550 894 165 035 1 759 940 3 250 201 34 514 303 139 1 158 979 22 655 69 173 50 342 95 192 529 228 476 302 21 565 1 682 127 171 054 12 244 532 158 137 644 318 652 619 379 327 679 23 784 1 295 766 267 114 5 525 476 2 680 633 2 539 674 66 978 4 859 464 1 077 133 172 276 265 688 2 590 177 6 000 328 696 -
93 641 284 574 1 278 158 91 278 58 795 1 458 555 2 074 361 8 566 108 22 265 4 098 361 149 065 869 694 1 557 037 20 568 261 614 1 329 352 150 792 306 000 156 174 220 508 508 651 852 571 4 702 107 552 1 257 554 192 493 11 057 656 438 143 944 147 832 531 057 95 240 1 084 236 1 054 387 114 437 2 793 063 820 526 2 352 376 447 163 178 333 366 169 2 980 300 2 123 317 804 17 416 198 821 108 308 817 828 21 005 28 825 150 000
54 648 224
41 409 111
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
18. Employee related costs Basic Bonus Medical aid - company contributions SDL Pension Contributions Leave pay provision charge Overtime payments Night allowances Travel Allowances Housing benefits and allowances Funeral Scheme Group Life insurance Unemployment Insurance Bargaining Council
18 499 276 951 110 1 349 054 306 967 2 129 305 (4 541) 1 277 971 172 390 1 693 077 133 350 74 064 558 874 155 813 10 201
15 122 765 801 007 1 141 307 269 475 1 839 497 191 419 1 064 920 152 295 2 120 000 38 520 67 104 520 687 130 032 7 980
27 306 911
23 467 008
848 209 385 351 50 945
805 660 363 540 56 578
1 284 505
1 225 778
664 315 307 930 21 546 23 077
607 115 300 000 34 243 36 952
1 016 868
978 310
48 389 21 892 2 692
582 144 262 704 41 095
72 973
885 943
129 452 45 867 8 149
102 162 43 784 2 069
183 468
148 015
619 614 278 466 30 139
566 767 262 704 56 630
Remuneration of Municipal Manager Annual Remuneration Car Allowance Contributions to UIF, Medical and Pension Funds
Remuneration of Chief Finance Officer Annual Remuneration Car Allowance Contributions to UIF, Medical and Pension Funds Other
Remuneration of Corporate Services Director Annual Remuneration Car Allowance Contributions to UIF, Medical and Pension Funds
The Corporate Services director resigned on 31 July 2015. Remuneration of Technical Services Director Annual Remuneration Car Allowance Contributions to UIF, Medical and Pension Funds
The Technical Services Director was appointed on 01 May 2016 Remuneration of Community Services Director Annual Remuneration Car Allowance Contributions to UIF, Medical and Pension Funds 39
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
928 219
886 101
416 932 5 589 960 (5 520 983)
390 861 5 059 159 (5 450 020)
485 909
416 932
3 478 359 (2 931 076)
151 387 2 981 258 (3 132 645)
18. Employee related costs (continued)
PAYE,UIF & SDL Opening Balance Council Subscription Amount Paid -current
Pension and Medical Aid Opening Balance Council Subscription Amount Paid -current
547 283
-
633 540 5 340 817 2 356 539 108 000
734 040 5 211 185 1 974 698 -
8 438 896
7 919 923
3 681 600 80 288
9 458 197 37 166
3 761 888
9 495 363
703 609 1 158 622
111 119 932 705 515 746
1 862 231
1 559 570
6 291 167 32 595
4 559 350 32 595
6 323 762
4 591 945
9 469
40 185
19. Remuneration of councillors Cellphone Allowances Councillors allowances Travel Allowances Data Allowance
20. Debt impairment Contributions to debt impairment provision - fines Contributions to debt impairment provision - trade debtors
21. Interest Received Interest revenue Interest earned-Banks Interest earned-outstanding receivables Interest earned on investments
22. Depreciation and amortisation Property, plant and equipment Intangible Assets
23. Impairment of assets Impairments Property, plant and equipment
40
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
24. Finance costs Finance leases Other interest paid on bank accounts
312 159 20 302
299 633 9 970
332 461
309 603
1 549 041 (1 549 041)
1 278 158 (1 278 158)
25. Auditors' remuneration Current year Audit Fees Current year fees paid
-
-
462 000 329 365 651 113 1 281 672
122 325 738 498 500 403 816 927
2 724 150
2 178 153
4 116 037 1 038 420
450 617 739 743
5 154 457
1 190 360
35 483 528
46 087 622
26. Contracted services Sanitation Valuation Cleaning Services Security
27. Repairs and Maintanance Buildings Motor Vehicles
28. Cash generated from operations Surplus Adjustments for: Depreciation and amortisation Loss on sale of Assets Finance costs - Finance leases Impairment deficit Movements in provisions Other non-cash items Changes in working capital: Receivables from Non-Exchange Transactions Other receivables from non-exchange transactions Payables from exchange transactions VAT Unspent conditional grants and receipts
6 323 762 312 159 9 469 (4 541) 62 706
4 591 945 56 245 299 633 40 185 191 419 43 802
(2 676 668) 9 952 6 234 092 877 987 799 004
(1 763 874) (6 634) 8 328 624 (1 792 520) (5 169 583)
47 431 450
41
50 906 864
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
29. Commitments Authorised capital expenditure Already contracted for but not provided for Community Infrastructure
Not yet contracted for and authorised by accounting officer Property, plant and equipment The funding if commitments will mainly be obtained from Grants. 30. Risk management Credit risk Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade debtors. The municipality only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party. Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on an ongoing basis. If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilisation of credit limits is regularly monitored. Sales to retail customers are settled in cash or using major credit cards. Credit guarantee insurance is purchased when deemed appropriate.
31. Events after the reporting date Events after the reporting date are those events, both favourable and unfavourable, that occur between the reporting date and the date when the financial statements are authorised for issue. Two types of events can be identified (a)Those that provide evidence of conditions that existed at the reporting date (adjusting events after the reporting date); and (b)Those are indicative of conditions that arose after the reporting date (non-adjusting events after the reporting date). Adjusting events are recognised in the annual financial statement as at reporting date, whereas non-adjusting events are recognised. The redermacation of municipal boundaries resulted in Ntambanana Municipality being dissolved and wards redistributed to three municipalities, which are Umhlathuze, uMfolozi and Mthonjaneni municipality. On the 3rd of August 2016 local municipality elections took place and new council was formed which incorporate one ward from Ntamabanana Municipality due to demarcation processes. This is a non-adjusting events as it is indicative of events arose after the reporting date. As a result of the above events uMfolozi Municipality absorbed four(4) employees from Ntambanana Municipality. The population of the municipality will increase, resulting in increase in grant allocation.
42
6 845 148 2 892 798
8 520 421 18 390 174
9 737 946
26 910 595
24 049 000
33 382 000
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
32. Unauthorised expenditure Opening Balance Current Year Unauthorised expenditure awaiting condonement
43 864 067 18 522 617
22 410 319 21 453 748
62 386 684
43 864 067
1 052 074
1 052 074
67 861 549 2 650 582
44 156 224 23 705 325
70 512 131
67 861 549
1 031 124 245 835 1 441 456
-
2 718 415
-
33. Fruitless and wasteful expenditure Opening Balance 34. Irregular expenditure Opening balance Add: Irregular Expenditure - current year Irregular expenditure awaiting condonement 35. Additional disclosure in terms of Municipal Finance Management Act Councillors' arrear consumer accounts The are no Councillors who had arrear accounts outstanding for more than 90 days at 30 June 2016: Supply chain management regulations In terms of section 36 of the Municipal Supply Chain Management Regulations any deviation from the Supply Chain Management Policy needs to be approved/condoned by the Municipal Manager and noted by Council. Current year deviations for 36 Current year-Deviations as a result of a Sole Supplier Current year- Emergency Quotations Current year- Only 2 Quotations Received
43
Appendix B June 2016
Analysis of property, plant and equipment as at 30 June 2016 Cost/Revaluation Accumulated depreciation Opening Balance Rand
Additions
Disposals
Transfers
Acqusitions
Rand
Rand
Rand
Rand
Correction of prior year error Rand
Closing Balance Rand
Opening Balance Rand
Acqusitions
Transfers
Depreciation
Impairment loss
Rand
Rand
Rand
Rand
Closing Balance Rand
Carrying value Rand
Land and buildings Land Buildings
10 404 853 7 385 974
516 232
-
-
-
-
10 404 853 7 902 206
(3 812 289)
-
-
(238 911)
-
(4 051 200)
10 404 853 3 851 006
17 790 827
516 232
-
-
-
-
18 307 059
(3 812 289)
-
-
(238 911)
-
(4 051 200)
14 255 859
Infrastructure Bus Terminals Lightning Pavements Road Signs Roads Storm water Drainage
2 989 926 701 118 48 417 10 800 25 924 634 205 246
-
-
5 751 668 15 261 428 -
-
-
8 741 594 701 118 48 417 10 800 41 186 062 205 246
(417 746) (128 285) (19 367) (6 480) (10 728 043) (133 409)
-
-
(270 371) (23 371) (1 613) (360) (1 359 932) (10 263)
-
(688 117) (151 656) (20 980) (6 840) (12 087 975) (143 672)
8 053 477 549 462 27 437 3 960 29 098 087 61 574
29 880 141
-
-
21 013 096
-
-
50 893 237
(11 433 330)
-
-
(1 665 910)
-
(13 099 240)
37 793 997
9 728 337 52 324 057
-
-
9 235 680
-
-
9 728 337 61 559 737
(1 191 159) (14 509 978)
-
-
(324 278) (2 013 193)
-
(1 515 437) (16 523 171)
8 212 900 45 036 566
62 052 394
-
-
9 235 680
-
-
71 288 074
(15 701 137)
-
-
(2 337 471)
-
(18 038 608)
53 249 466
Community Assets Sportfields and Stadiums Community Assets
Page 44
Appendix B June 2016
Analysis of property, plant and equipment as at 30 June 2016 Cost/Revaluation Accumulated depreciation Opening Balance Rand
Additions
Disposals
Transfers
Acqusitions
Rand
Rand
Rand
Rand
Correction of prior year error Rand
Closing Balance Rand
Opening Balance Rand
Acqusitions
Transfers
Depreciation
Impairment loss
Rand
Rand
Rand
Rand
Closing Balance Rand
Carrying value Rand
Leased Assets Office Equipments Vehicles
1 174 323 5 973 058
821 744
-
-
-
-
1 174 323 6 794 802
(734 111) (1 216 702)
-
-
(258 314) (1 331 494)
-
(992 425) (2 548 196)
181 898 4 246 606
7 147 381
821 744
-
-
-
-
7 969 125
(1 950 813)
-
-
(1 589 808)
-
(3 540 621)
4 428 504
55 468 424
47 198 791
-
(30 248 776)
-
-
72 418 439
-
-
-
-
-
-
72 418 439
55 468 424
47 198 791
-
(30 248 776)
-
-
72 418 439
-
-
-
-
-
-
72 418 439
2 148 397 1 909 627 631 298
259 818 495 703 -
-
-
-
-
2 408 215 2 405 330 631 298
(1 382 378) (1 244 278) (547 125)
-
-
(195 867) (179 026) (84 173)
(9 469) -
(1 578 245) (1 432 773) (631 298)
829 970 972 557 -
4 689 322
755 521
-
-
-
-
5 444 843
(3 173 781)
-
-
(459 066)
(9 469)
(3 642 316)
1 802 527
Assets Under Construction Assets under Construction
Other assets Equipment Furniture & Fittings Vehicles
Page 45
Appendix B June 2016
Analysis of property, plant and equipment as at 30 June 2016 Cost/Revaluation Accumulated depreciation Opening Balance Rand
Additions
Disposals
Transfers
Acqusitions
Rand
Rand
Rand
Rand
Correction of prior year error Rand
Closing Balance Rand
Opening Balance Rand
Acqusitions
Transfers
Depreciation
Impairment loss
Rand
Rand
Rand
Rand
Closing Balance Rand
Carrying value Rand
Total property plant and equipment Land and buildings Infrastructure Community Assets Leased Assets Assets Under Construction Other assets
17 790 827 29 880 141 62 052 394 7 147 381 55 468 424 4 689 322
516 232 821 744 47 198 791 755 521
-
177 028 489
49 292 288
-
21 013 096 9 235 680 (30 248 776) -
-
-
18 307 059 50 893 237 71 288 074 7 969 125 72 418 439 5 444 843
(3 812 289) (11 433 330) (15 701 137) (1 950 813) (3 173 781)
-
-
(238 911) (1 665 910) (2 337 471) (1 589 808) (459 066)
(9 469)
(4 051 200) (13 099 240) (18 038 608) (3 540 621) (3 642 316)
14 255 859 37 793 997 53 249 466 4 428 504 72 418 439 1 802 527
-
-
-
226 320 777
(36 071 350)
-
-
(6 291 166)
(9 469)
(42 371 985)
183 948 792
Agricultural/Biological assets Intangible assets Computers - software & programming
162 978
-
-
-
-
-
162 978
(118 807)
-
-
(32 595)
-
(151 402)
11 576
162 978
-
-
-
-
-
162 978
(118 807)
-
-
(32 595)
-
(151 402)
11 576
-
-
18 307 059 50 893 237 71 288 074 7 969 125 72 418 439 5 444 843 162 978
(3 812 289) (11 433 330) (15 701 137) (1 950 813) (3 173 781) (118 807)
-
-
(238 911) (1 665 910) (2 337 471) (1 589 808) (459 066) (32 595)
(9 469) -
(4 051 200) (13 099 240) (18 038 608) (3 540 621) (3 642 316) (151 402)
14 255 859 37 793 997 53 249 466 4 428 504 72 418 439 1 802 527 11 576
-
-
226 483 755
(36 190 157)
-
-
(6 323 761)
(9 469)
(42 523 387)
183 960 368
Total Land and buildings Infrastructure Community Assets Leased Assets Assets Under Construction Other assets Intangible assets
17 790 827 29 880 141 62 052 394 7 147 381 55 468 424 4 689 322 162 978
516 232 821 744 47 198 791 755 521 -
-
177 191 467
49 292 288
-
21 013 096 9 235 680 (30 248 776) -
Page 46
Appendix B Analysis of property, plant and equipment as at 30 June 2015 Cost/Revaluation Accumulated depreciation Opening Balance Rand
Additions
Acqusitions
Transfers
Revaluations
Restatements
Rand
Rand
Rand
Rand
Rand
Closing Balance Rand
Opening Balance Rand
Restatements Acqusitions Rand
Rand
Depreciation
Impairment loss
Rand
Rand
Closing Balance Rand
Carrying value Rand
Land and buildings Land Buildings
10 404 853 7 385 974
-
-
-
-
-
10 404 853 7 385 974
(3 574 792)
-
-
(237 497)
-
(3 812 289)
10 404 853 3 573 685
17 790 827
-
-
-
-
-
17 790 827
(3 574 792)
-
-
(237 497)
-
(3 812 289)
13 978 538
1 600 727 280 409 48 417 10 800 22 939 637 205 246
-
-
4 794 905 -
-
-
1 600 727 280 409 48 417 10 800 27 734 542 205 246
(337 934) (106 105) (17 753) (6 120) (9 992 958) (123 147)
-
-
(79 812) (22 180) (1 614) (360) (735 086) (10 262)
-
(417 746) (128 285) (19 367) (6 480) (10 728 044) (133 409)
1 182 981 152 124 29 050 4 320 17 006 498 71 837
25 085 236
-
-
4 794 905
-
-
29 880 141
(10 584 017)
-
-
(849 314)
-
(11 433 331)
18 446 810
44 884 026 3 887 243
-
-
7 440 031 5 841 094
-
-
52 324 057 9 728 337
(12 924 045) (1 019 280)
-
-
(1 585 933) (171 879)
-
(14 509 978) (1 191 159)
37 814 079 8 537 178
48 771 269
-
-
13 281 125
-
-
62 052 394
(13 943 325)
-
-
(1 757 812)
-
(15 701 137)
46 351 257
Infrastructure Bus Terminals Lighting Pavements Road Signs Roads Storm water Drainage
Community Assets Community Assets Sportsfields and stadium
Page 47
Appendix B June 2016
Analysis of property, plant and equipment as at 30 June 2015 Cost/Revaluation Accumulated depreciation Opening Balance Rand
Additions
Acqusitions
Transfers
Revaluations
Restatements
Rand
Rand
Rand
Rand
Rand
Closing Balance Rand
Opening Balance Rand
Restatements Acqusitions Rand
Rand
Depreciation
Impairment loss
Rand
Rand
Closing Balance Rand
Carrying value Rand
Leased assets Office Equipments Vehicles
1 174 323 2 217 176
-
-
3 755 883
-
-
1 174 323 5 973 059
(499 247) (332 852)
-
-
(234 864) (883 850)
-
(734 111) (1 216 702)
440 212 4 756 357
3 391 499
-
-
3 755 883
-
-
7 147 382
(832 099)
-
-
(1 118 714)
-
(1 950 813)
5 196 569
Assets under Construction Assets under Constructions
27 457 556
41 044 314
-
(18 076 030)
-
-
50 425 840
-
-
-
-
-
-
50 425 840
27 457 556
41 044 314
-
(18 076 030)
-
-
50 425 840
-
-
-
-
-
-
50 425 840
1 821 759 2 497 524 4 281 028
326 638 43 401 -
-
-
-
-
2 148 397 2 540 925 4 281 028
(1 209 325) (1 470 861) (3 937 440)
-
-
(173 052) (280 358) (142 603)
(40 185) -
(1 382 377) (1 791 404) (4 080 043)
766 020 749 521 200 985
8 600 311
370 039
-
-
-
-
8 970 350
(6 617 626)
-
-
(596 013)
(40 185)
(7 253 824)
1 716 526
Other assets Equipment Furniture and Fittings Vehicles
Page 48
Appendix B June 2016
Analysis of property, plant and equipment as at 30 June 2015 Cost/Revaluation Accumulated depreciation Opening Balance Rand
Additions
Acqusitions
Transfers
Revaluations
Restatements
Rand
Rand
Rand
Rand
Rand
Closing Balance Rand
Opening Balance Rand
Restatements Acqusitions Rand
Rand
Depreciation
Impairment loss
Rand
Rand
Closing Balance Rand
Carrying value Rand
Total property plant and equipment Land and buildings Infrastructure Community Assets Leased assets Assets under Construction Other assets
17 790 827 25 085 236 48 771 269 3 391 499 27 457 556 8 600 311
41 044 314 370 039
-
4 794 905 13 281 125 3 755 883 (18 076 030) -
-
-
17 790 827 29 880 141 62 052 394 7 147 382 50 425 840 8 970 350
(3 574 792) (10 584 017) (13 943 325) (832 099) (6 617 626)
-
-
(237 497) (849 314) (1 757 812) (1 118 714) (596 013)
(40 185)
(3 812 289) (11 433 331) (15 701 137) (1 950 813) (7 253 824)
13 978 538 18 446 810 46 351 257 5 196 569 50 425 840 1 716 526
131 096 698
41 414 353
-
3 755 883
-
-
176 266 934
(35 551 859)
-
-
(4 559 350)
(40 185)
(40 151 394)
136 115 540
Intangible assets Computers - software & programming
162 978
-
-
-
-
-
162 978
(86 212)
-
-
(32 595)
-
(118 807)
44 171
162 978
-
-
-
-
-
162 978
(86 212)
-
-
(32 595)
-
(118 807)
44 171
Total Land and buildings Infrastructure Community Assets Leased assets Assets under Construction Other assets Intangible assets
17 790 827 25 085 236 48 771 269 3 391 499 27 457 556 8 600 311 162 978
41 044 314 370 039 -
-
4 794 905 13 281 125 3 755 883 (18 076 030) -
-
-
17 790 827 29 880 141 62 052 394 7 147 382 50 425 840 8 970 350 162 978
(3 574 792) (10 584 017) (13 943 325) (832 099) (6 617 626) (86 212)
-
-
(237 497) (849 314) (1 757 812) (1 118 714) (596 013) (32 595)
(40 185) -
(3 812 289) (11 433 331) (15 701 137) (1 950 813) (7 253 824) (118 807)
13 978 538 18 446 810 46 351 257 5 196 569 50 425 840 1 716 526 44 171
131 259 676
41 414 353
-
3 755 883
-
-
176 429 912
(35 638 071)
-
-
(4 591 945)
(40 185)
(40 270 201)
136 159 711
Page 49
Appendix D June 2016
Segmental Statement of Financial Performance for the year ended Prior Year Current Year Actual Income Rand
Actual Expenditure Rand
Surplus /(Deficit) Rand
Actual Income Rand
Actual Expenditure Rand
Surplus /(Deficit) Rand
Municipality 131 824 157 10 621 643 1 226 946 143 672 746
21 357 953 (21 357 953) Executive & Council/Mayor and Council 36 807 619 95 016 538 Finance & Admin/Finance 7 468 461 3 153 182 Planning and Development/Economic Development/Plan 16 416 669 (16 416 669) Corporate Services 15 313 177 (14 086 231) Comm. & Social/Libraries and archives
1 011 148 106 643 362 41 976 258
28 842 529 (27 831 381) 42 396 145 64 247 217 25 410 686 16 565 572
5 237 988 880 389
8 511 168 (3 273 180) 15 434 852 (14 554 463)
97 363 879
155 749 145 120 595 380
46 308 867
Page 50
35 153 765
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
General Information Legal form of entity
Munipality
Executive Committee Mayor
. SW Mgenge ME Ntshangase BT Mnqayi FPB Mpungose FM Thusi SK Ngema
Grading of local authority
1
Accounting Officer
KE Gamede
Chief Financial Officer
JV Nkosi
Registered office
25 Bredelia Street Kwa-Mbonambi 3915
Postal address
P.O Box 96 Kwa-Mbonambi 3915
Bankers
ABSA Bank
Auditors
Auditor General South Africa
Telephone
(035) 580-1421
Fax Number
(035) 580-1141
E-mail Address ( Accounting Officer)
[email protected]
1
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Index The reports and statements set out below comprise the annual financial statements presented to the Council: Index
Page
Accounting Officer's Responsibilities and Approval
3
Report of the Auditor General
4
Statement of Financial Position
5
Statement of Financial Performance
6
Statement of Changes in Net Assets
7
Statement of Cash Flows
8
Statement of Comparison of Budgets and Actual Amount
9 - 11
Accounting Policies
12 - 25
Notes to the Annual Financial Statements
26 - 43
Appendixes:Unaudited Supplimentary Schedules Appendix B: Analysis of Property, Plant and Equipment
44
Appendix D: Segmental Statement of Financial Performance
50
2
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Officer's Responsibilities and Approval The accounting officer is required by the Municipal Finance Management Act (Act 56 of 2003), to maintain adequate accounting records and is responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is the responsibility of the accounting officer to ensure that the annual financial statements fairly present the state of affairs of the municipality as at the end of the financial year and the results of its operations and cash flows for the period then ended. The external auditors are engaged to express an independent opinion on the annual financial statements and was given unrestricted access to all financial records and related data. The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. The annual financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. The accounting officer acknowledges that he is ultimately responsible for the system of internal financial control established by the municipality and place considerable importance on maintaining a strong control environment. To enable the accounting officer to meet these responsibilities, the accounting officer sets standards for internal control aimed at reducing the risk of error or deficit in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the municipality and all employees are required to maintain the highest ethical standards in ensuring the municipality’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the municipality is on identifying, assessing, managing and monitoring all known forms of risk across the municipality. While operating risk cannot be fully eliminated, the municipality endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The accounting officer is of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or deficit. The accounting officer has reviewed the municipality’s cash flow forecast for the year to 30 June 2017 and, in the light of this review and the current financial position, he is satisfied that the municipality has or has access to adequate resources to continue in operational existence for the foreseeable future. The municipality is wholly dependent on the grants for continued funding of operations. The annual financial statements are prepared on the basis that the municipality is a going concern and that the municipality has neither the intention nor the need to liquidate or curtail materially the scale of the municipality. The external auditors are responsible for independently auditing and reporting on the municipality's annual financial statements. The annual financial statements have been examined by the municipality's external auditors and their report is presented on page 4. The annual financial statements set out on pages 5 to 43, which have been prepared on the going concern basis, were approved by the accounting officer on 31 August 2016 and were signed on its behalf by:
KE Gamede Municipal Manager
3
Report of the Auditor General To the Council of uMfolozi Local Municipality
Report on the financial statements I have audited the accompanying annual financial statements of the uMfolozi Municipality which comprise the statement of financial position as at 30 June 2016, statement of financial performance, statement of changes in net assets and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes, and the accounting officer’s report, as set out on pages 5 to 43.
__________________________________
4
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Statement of Financial Position as at 30 June 2016 Figures in Rand
Note(s)
2016
2015
Assets Current Assets Receivables from Non-Exchange Transactions Other Receivables from non-exchange transactions VAT receivable Cash and cash equivalents
4 6 7 8
Non-Current Assets Property, plant and equipment Intangible assets
2 3
Total Assets
10 802 592 80 579 3 099 196 210 604
8 202 673 92 211 3 956 920 3 188 448
14 192 971
15 440 252
183 948 794 11 577
140 957 142 44 170
183 960 371
141 001 312
198 153 342
156 441 564
1 278 980 25 163 685 5 564 291
1 702 219 18 929 593 4 765 287
32 006 956
25 397 099
2 979 386
3 360 993
34 986 342
28 758 092
163 167 000
127 683 472
163 167 000
127 683 472
Liabilities Current Liabilities Finance lease obligation Payables from exchange transactions Unspent conditional grants and receipts
10 12&13 11
Non-Current Liabilities Finance lease obligation
10
Total Liabilities Net Assets Accumulated surplus
* See Note
5
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Statement of Financial Performance Figures in Rand
Note(s)
2016
2015
312 222 141 714 294 490 357 505 168 850 1 862 232
278 715 111 175 725 789 534 680 212 652 1 559 564
3 137 013
3 422 575
14
6 857 475
6 490 400
16
141 600 993 4 153 664
122 591 586 10 050 097
Total revenue from non-exchange transactions
152 612 132
139 132 083
Total revenue
155 749 145
142 554 658
Revenue Revenue from exchange transactions Service charges Rental of facilities and equipment Licences and permits Miscelleneous income Sale of tender documents Interest received
15
21
Total revenue from exchange transactions Revenue from non-exchange transactions Taxation revenue Property rates Transfer revenue Government Grants Fines
Expenditure Employee related costs Remuneration of councillors Depreciation and amortisation Impairment loss/ Reversal of impairments Finance costs Provision for Bad debts movements Repairs and maintenance Contracted services Grants expenditures General Expenses
18 19 22 23 24 20 27 26 17
Total expenditure
(27 306 911) (8 438 896) (6 323 762) (9 469) (332 461) (3 761 888) (5 154 457) (2 724 150) (11 565 399) (54 648 224)
(23 467 008) (7 919 293) (4 591 945) (40 185) (309 603) (9 495 363) (1 190 360) (2 178 153) (5 809 770) (41 409 111)
(120 265 617) (96 410 791)
Operating surplus Loss on disposal of assets
35 483 528 -
46 143 867 (56 245)
Surplus for the year
35 483 528
46 087 622
* See Note
6
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Statement of Changes in Net Assets Accumulated surplus
Figures in Rand Balance at 01 July 2014 Changes in net assets Surplus for the year Total changes Balance at 01 July 2015 Changes in net assets Surplus for the year Total changes Balance at 30 June 2016
* See Note
7
Total net assets
81 595 850
81 595 850
46 087 622
46 087 622
46 087 622
46 087 622
127 683 472
127 683 472
35 483 528
35 483 528
35 483 528
35 483 528
163 167 000
163 167 000
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Statement of Cash Flows Figures in Rand
Note(s)
2016
2015
Cash flows from operating activities Receipts Sale of goods and services Grants Interest income Other receipts
1 389 339 141 939 000 1 862 232 483 903
4 785 676 117 422 003 1 559 564 1 059 302
145 674 474
124 826 545
(35 749 677) (62 473 045) (20 302)
(31 194 882) (42 714 829) (9 970)
(98 243 024)
(73 919 681)
28
47 431 450
50 906 864
2 2
(48 470 546) (821 744) -
(46 456 938) (3 755 884) 144 737
Payments Employee costs Suppliers Finance costs
Net cash flows from operating activities Cash flows from investing activities Purchase of property, plant and equipment Increase in Finance Leases Proceeds from sale of Asset Net cash flows from investing activities
(49 292 290) (50 068 085)
Cash flows from financing activities Finance lease payments Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year 8
Cash and cash equivalents at the end of the year
* See Note
8
(1 117 004)
2 193 765
(2 977 844) 3 188 448
3 032 544 155 904
210 604
3 188 448
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Statement of Comparison of Budgets and Actual Amounts Figures in Rand
Original budget
Budget Final adjustments adjustments (i.t.o. s28 and budget s31 of the MFMA)
Shifting of funds (i.t.o. s31 of the MFMA)
Virement Final budget (i.t.o. council approved policy)
Actual outcome
Unauthorised Variance expenditure
Actual outcome as % of final budget
Actual outcome as % of original budget
2016 Financial Performance Property rates Service charges Investment revenue Transfers recognised operational Other own revenue Total revenue (excluding capital transfers and contributions) Employee costs Remuneration of councillors Debt impairment Depreciation and asset impairment Finance charges Transfers and grants Other expenditure Total expenditure Surplus/(Deficit)
5 367 840 313 376 463 400 98 420 000 27 053 384 131 618 000
(31 595 912) (7 771 623) (450 000) (61 925 145) (101 742 680) 29 875 320
-
5 367 840 313 376 463 400 98 420 000
-
5 367 840 313 376 463 400 98 420 000
6 857 475 312 222 1 862 232 110 228 608
1 489 635 (1 154) 1 398 832 11 808 608
10 053 384
-
10 053 384
5 116 223
(4 937 161)
(17 000 000) 114 618 000
-
114 618 000
124 376 760
(17 000 000)
2 134 677 (67 026) (225 000) (1 842 971)
(29 461 235) (7 838 649)
-
-
-
(29 461 235) (7 838 649) -
% % % %
128 100 402 112
% % % %
51 %
19 %
109 %
94 %
(27 306 911) (8 438 896)
-
2 154 324 (600 247)
93 % 108 %
86 % 109 %
(3 761 888) (6 333 231)
-
(3 761 888) (6 333 231)
-% DIV/0 %
-% DIV/0 %
(675 000) (63 768 116)
-
-
(332 461) (11 565 399) (62 526 831)
-
(332 461) (10 890 399) 1 241 285
-% 1 713 % 98 %
-% 2 570 % 101 %
(320) (101 743 000)
-
- (101 743 000) (120 265 617)
-
(18 522 617)
118 %
118 %
(8 763 857)
32 %
14 %
(17 000 320)
12 875 000
-
(675 000) (63 768 116)
9 758 760
128 100 402 112
12 875 000
9
4 111 143
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Appropriation Statement Figures in Rand
Original budget
Transfers recognised capital
33 382 000
Surplus (Deficit) after capital transfers and contributions
63 257 320
Surplus/(Deficit) for the year
63 257 320
Budget Final adjustments adjustments (i.t.o. s28 and budget s31 of the MFMA) 6 155 000
Shifting of funds (i.t.o. s31 of the MFMA)
Virement Final budget (i.t.o. council approved policy)
Actual outcome
Unauthorised Variance expenditure
Actual outcome as % of final budget
Actual outcome as % of original budget
39 537 000
-
39 537 000
31 372 385
(8 164 615)
79 %
94 %
(10 845 320)
52 412 000
-
52 412 000
35 483 528
(16 928 472)
68 %
56 %
(10 845 320)
52 412 000
-
52 412 000
35 483 528
(16 928 472)
68 %
56 %
(10 845 320)
52 412 000
-
52 412 000
104 407 458
51 995 458
199 %
165 %
Capital expenditure and funds sources Total capital expenditure
63 257 320
10
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Appropriation Statement Figures in Rand
Original budget
Budget Final adjustments adjustments (i.t.o. s28 and budget s31 of the MFMA)
Shifting of funds (i.t.o. s31 of the MFMA)
Virement Final budget (i.t.o. council approved policy)
Actual outcome
Unauthorised Variance expenditure
Actual outcome as % of final budget
Actual outcome as % of original budget
Cash flows Net cash from (used) operating Net cash from (used) investing Net cash from (used) financing Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at year end
28 700 000
53 794 000
82 494 000
-
82 494 000
47 431 450
(35 062 550)
57 %
165 %
(44 082 000)
(2 175 000)
(46 257 000)
-
(46 257 000)
(49 292 290)
(3 035 290)
-%
-%
17 000 000
-
17 000 000
-
17 000 000
(1 117 004)
(18 117 004)
-%
-%
1 618 000
51 619 000
53 237 000
-
53 237 000
(2 977 844)
(56 214 844)
(6)%
(184)%
156 000
3 032 000
3 188 000
-
3 188 000
3 188 448
448
-%
2 044 %
1 774 000
54 651 000
56 425 000
-
56 425 000
210 604
56 214 396
-%
12 %
11
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.
Presentation of Annual Financial Statements
The Annual Financial Statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention unless specified otherwise. These Annual Financial Statements have been prepared in accordance with the Generally Recognised Accounting Practice (GRAP) issued by the Accounting Standards Board in accordance with Section 122(3) of the Municipal Finance Management Act, (Act No 56 of 2003). Accounting policies for material transaction, events or conditions not covered by the above GRAP Standards have been developed in accordance with paragraph 7,11 and 12 of GRAP 3.These accounting policies and the applicable disclosure been based on South African Statements of General Accepted Accounting Practices (SA GAAP) including any interpretation of such Statements issued by the Accounting Practise Board. 1.1 Presentation currency These annual financial statements are presented in South African Rand, which is the functional currency of the municipality. 1.2 Grap Standards Summary Applicable Standards GRAP 1 GRAP 2 GRAP 3 GRAP 5 GRAP 9 GRAP 13 GRAP 14 GRAP 16 GRAP 17 GRAP 19 GRAP 23 GRAP 24 GRAP 25 GRAP 31 GRAP 100 GRAP 104 IGRAP 1
-
Presentation of Financial Statement Cash Flow Statement Accounting Policies , Changes in Accounting Estimates and Errors Borrowing Costs Revenue from Exchange Transactions Leases Events After the Reporting Date Investment Properties Property, Plant and Equipment Provisions, Contingent Liabilities and Contingent Assets Revenue from Non-exchange Transactions Presentation of Budget Information in Financial Statements Employee Benefits Intangible Assets Non-current Assets Held for Sale and Discontinued Operations Financial Instruments Traffic fines
New Standards, Amendments and Interpretations to GRAP Standards Approved But Not yet Effective: GRAP 32 GRAP 108 IGRAP 17 GRAP 20 GRAP 109
Service Concession Arrangment : Grantor Statutory Receivables Service Concession Arrangements Where a Grantor Controls a Significant Residual Interest in an Asset. Related party disclosures Accounting by principals and agents
Unknown Effective date not approved Effective date not approved Effective date not approved Effective date not approved
1.3 Going Concern Assumption Basis These Annual Financial Statements have been prepared on the assumption that the municipality will continue to operate as a going concern for at least the next 12 months.
1.4 Significant judgements and sources of estimation uncertainty In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant judgements include:
12
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.4 Significant judgements and sources of estimation uncertainty (continued) Trade receivables / Held to maturity investments and/or loans and receivables The municipality assesses its trade receivables, held to maturity investments and loans and receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit, the surplus makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset. The impairment for trade receivables, held to maturity investments and loans and receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for national and industry-specific economic conditions and other indicators present at the reporting date that correlate with defaults on the portfolio. These annual loss ratios are applied to loan balances in the portfolio and scaled to the estimated loss emergence period. Impairment testing The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of valuein-use calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions. It is reasonably possible that the [name a key assumption] assumption may change which may then impact our estimations and may then require a material adjustment to the carrying value of goodwill and tangible assets. The municipality reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. In addition, goodwill is tested on an annual basis for impairment. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value in use of goodwill and tangible assets are inherently uncertain and could materially change over time. They are significantly affected by a number of factors including [list entity specific variables, i.e. production estimates, supply demand], together with economic factors such as [list economic factors such as exchange rates inflation interest]. Provisions Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 12 - Provisions. Post retirement benefits The present value of the post retirement obligation depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) include the discount rate. Any changes in these assumptions will impact on the carrying amount of post retirement obligations. The municipality determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the municipality considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. Other key assumptions for pension obligations are based on current market conditions. Additional information is disclosed in Note 9.
13
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.4 Significant judgements and sources of estimation uncertainty (continued) Allowance for doubtful debts On debtors an impairment loss is recognised in surplus and deficit when there is objective evidence that it is impaired. The impairment is measured as the difference between the debtors carrying amount and the present value of estimated future cash flows discounted at the effective interest rate, computed at initial recognition. An impairment of trade receivables is accounted for by reducing the carrying amount of trade receivables through the use of an allowance account, and the amount of the loss is recognised in the Statement of Financial Performance within operating expenses. When a trade receivable is uncollectible, it is written off. Subsequent recoveries of amounts previously written off are credited against operating expenses in the Statement of Financial PerformanceAdditional text Provision for doubtful debts is calculated by categorising the outstanding into three: Category A are governement properties and those who owe less the 30 days. No provision is made forthem. Category B are those who irregular payers, and the debts is more then 60 days. The provision is made at 25% Category C are bad payers and the provision is at 50% 1.5 Property, plant and equipment Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used during more than one year. Items of property, plant and equipment are initially recognised as assets on acquisition date and are initially recorded at cost. The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by the municipality. Trade discounts and rebates are deducted in arriving at the cost. The cost also includes the necessary costs of dismantling and removing the asset and restoring the site on which it is located. When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Where an asset is acquired by the municipality for no or nominal consideration (i.e. a non-exchange transaction), the cost is deemed to be equal to the fair value of that asset on the date acquired. Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item's fair value was not determinable, it's deemed cost is the carrying amount of the asset's given up. Major spare parts and servicing equipment qualify as property, plant and equipment when the municipality expects to use them during more than one period. Similarly, if the major spare parts and servicing equipment can be used only in connection with an item of property, plant and equipment, they are accounted for as property, plant and equipment. Subsequent Measurement - Cost Model Subsequent to initial recognition, items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Land is not depreciated as it is deemed to have an indefinite useful life. Where the municipality replaces parts of an asset, it derecognises the part of the asset being replaced and capitalises the new component. Subsequent expenditure incurred on an asset is capitalised when it increases the capacity or future economic benefits associated with the asset. Depreciation Depreciation is calculated on the depreciable amount, using the straight-line method over the estimated useful lives of the assets. Components of assets that are significant in relation to the whole asset and that have different useful lives are depreciated separately. The annual depreciation rates are based on the following estimated average asset lives.
The useful lives of items of property, plant and equipment have been assessed as follows: 14
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.5 Property, plant and equipment (continued) Item Infrastructure Roads and paving Stormwater Drainage Community Buildings Recreational facilities Community Halls Parks and Gardens Libraries Equipment and furniture Office Equipment Furniture and fittings Bins and containers Specialised plant and equipment Other property, plant and equipment Buildings Specialised vehicles Other vehicles Other Emergency equipment Computer equipment Landfill Sites
Average useful life 30 20 30 20-30 30 30 30 4 7-10 5 10-15 30 10 5 15 7 15
The residual value, the useful life of an asset and the depreciation method is reviewed annually and any changes are recognised as a change in accounting estimate in the Statement of Financial Performance. The municipality tests for impairment where there is an indication that an asset may be impaired. An assessment of whether there is an indication of possible impairment is done at each reporting date. Where the carrying amount of an item of property, plant and equipment is greater than the estimated recoverable amount (or recoverable service amount), it is written down immediately to its recoverable amount (or recoverable service amount) and an impairment loss is charged to the Statement of Financial Performance. Derecognition Items of Property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset. The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying value and is recognised in the Statement of Financial Performance.
15
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.6 Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance. Examples include computer software, licenses, and development costs. The municipality recognises an intangible asset in its Statement of Financial Position only when it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the municipality and the cost or fair value of the asset can be measured reliably. Internally generated intangible assets are subject to strict recognition criteria before they are capitlised. Research expenditure is never capitalised, while development expenditure is only capitalised to the extent that: • • • •
the municipality intends to complete the intangible asset for use or sale; it is technically feasible to complete the intangible asset; the municipality has the resources to complete the project; and it is probable that the municipality will receive future economic benefits or service potential.
Intangible assets are initially recognised at cost. Where an intangible asset is acquired by the municipality for no or nominal consideration (i.e. a non-exchange transaction), the cost is deemed to be equal to the fair value of that asset on the date acquired. Where an intangible asset is acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item's fair value was not determinable, it's deemed cost is the carrying amount of the asset's given up Subsequent Measurement - Cost Model Intangible assets are subsequently carried at cost less accumulated amortisation and impairments. The cost of an intangible asset is amortised over the useful life where that useful life is finite. Where the useful life is indefinite, the asset is not amortised but is subject to an annual impairment test. Amortisation and Impairment Amortisation is charged so as to write off the cost or valuation of intangible assets over their estimated useful lives using the straight line method. The annual amortisation rates are based on the following estimated average asset lives. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at each reporting date and any changes are recognised as a change in accounting estimate in the Statement of Financial Performance. The municipality tests intangible assets with finite useful lives for impairment where there is an indication that an asset may be impaired. An assessment of whether there is an indication of possible impairment is done at each reporting date. Where the carrying amount of an item of an intangible asset is greater than the estimated recoverable amount (or recoverable service amount), it is written down immediately to its recoverable amount (or recoverable service amount) and an impairment loss is charged to the Statement of Financial Performance. Derecognition Intangible assets are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset. The gain or loss arising on the disposal or retirement of an intangible asset is determined as the difference between the sales proceeds and the carrying value and is recognised in the Statement of Performance. The annual amortisation rates are based on the following estimated average asset lives.
Item Computer software, other
Useful life 5 years
1.7 Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or a residual interest of another entity.
16
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.7 Financial instruments (continued) The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility. A concessionary loan is a loan granted to or received by an entity on terms that are not market related. Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Derecognition is the removal of a previously recognised financial asset or financial liability from an entity’s statement of financial position. A derivative is a financial instrument or other contract with all three of the following characteristics: Its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract (sometimes called the ‘underlying’). It requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors. It is settled at a future date. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, an entity shall estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment, call and similar options) but shall not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate (see the Standard of GRAP on Revenue from Exchange Transactions), transaction costs, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial instruments can be estimated reliably. However, in those rare cases when it is not possible to reliably estimate the cash flows or the expected life of a financial instrument (or group of financial instruments), the entity shall use the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments). Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction. A financial asset is: cash; a residual interest of another entity; or a contractual right to: receive cash or another financial asset from another entity; or exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity. A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. A financial liability is any liability that is a contractual obligation to: deliver cash or another financial asset to another entity; or exchange financial assets or financial liabilities under conditions that are potentially unfavourable to the entity. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
17
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.7 Financial instruments (continued) Liquidity risk is the risk encountered by an entity in the event of difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Loan commitment is a firm commitment to provide credit under pre-specified terms and conditions. Loans payable are financial liabilities, other than short-term payables on normal credit terms. Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. A financial asset is past due when a counterparty has failed to make a payment when contractually due. A residual interest is any contract that manifests an interest in the assets of an entity after deducting all of its liabilities. A residual interest includes contributions from owners, which may be shown as: equity instruments or similar forms of unitised capital; a formal designation of a transfer of resources (or a class of such transfers) by the parties to the transaction as forming part of an entity’s net assets, either before the contribution occurs or at the time of the contribution; or a formal agreement, in relation to the contribution, establishing or increasing an existing financial interest in the net assets of an entity. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability. An incremental cost is one that would not have been incurred if the entity had not acquired, issued or disposed of the financial instrument. Financial instruments at amortised cost are non-derivative financial assets or non-derivative financial liabilities that have fixed or determinable payments, excluding those instruments that: the entity designates at fair value at initial recognition; or are held for trading. Financial instruments at cost are investments in residual interests that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured. Financial instruments at fair value comprise financial assets or financial liabilities that are: derivatives; combined instruments that are designated at fair value; instruments held for trading. A financial instrument is held for trading if: it is acquired or incurred principally for the purpose of selling or repurchasing it in the near-term; or on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short term profit-taking; non-derivative financial assets or financial liabilities with fixed or determinable payments that are designated at fair value at initial recognition; and financial instruments that do not meet the definition of financial instruments at amortised cost or financial instruments at cost. Initial recognition The entity recognises a financial asset or a financial liability in its statement of financial position when the entity becomes a party to the contractual provisions of the instrument. The entity recognises financial assets using trade date accounting.
18
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.7 Financial instruments (continued) Initial measurement of financial assets and financial liabilities The entity measures a financial asset and financial liability initially at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. The entity measures a financial asset and financial liability initially at its fair value [if subsequently measured at fair value]. The entity first assesses whether the substance of a concessionary loan is in fact a loan. On initial recognition, the entity analyses a concessionary loan into its component parts and accounts for each component separately. The entity accounts for that part of a concessionary loan that is: a social benefit in accordance with the Framework for the Preparation and Presentation of Financial Statements, where it is the issuer of the loan; or non-exchange revenue, in accordance with the Standard of GRAP on Revenue from Non-exchange Transactions (Taxes and Transfers), where it is the recipient of the loan. 1.8 Leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. When a lease includes both land and buildings elements, the entity assesses the classification of each element separately. Finance leases - lessor The municipality recognises finance lease receivables as assets on the statement of financial position. Such assets are presented as a receivable at an amount equal to the net investment in the lease. Finance revenue is recognised based on a pattern reflecting a constant periodic rate of return on the municipality’s net investment in the finance lease. Finance leases - lessee Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease. Minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of on the remaining balance of the liability. Any contingent rents are expensed in the period in which they are incurred. Operating leases - lessor Operating lease revenue is recognised as revenue on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease revenue. The aggregate cost of incentives is recognised as a reduction of rental revenue over the lease term on a straight-line basis. The aggregate benefit of incentives is recognised as a reduction of rental expense over the lease term on a straight-line basis. Income for leases is disclosed under revenue in statement of financial performance.
19
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.8 Leases (continued) Operating leases - lessee Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability. 1.9 Employee benefits Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees. A qualifying insurance policy is an insurance policy issued by an insurer that is not a related party (as defined in the Standard of GRAP on Related Party Disclosures) of the reporting entity, if the proceeds of the policy can be used only to pay or fund employee benefits under a defined benefit plan and are not available to the reporting entity’s own creditors (even in liquidation) and cannot be paid to the reporting entity, unless either: the proceeds represent surplus assets that are not needed for the policy to meet all the related employee benefit obligations; or the proceeds are returned to the reporting entity to reimburse it for employee benefits already paid. Termination benefits are employee benefits payable as a result of either: an entity’s decision to terminate an employee’s employment before the normal retirement date; or an employee’s decision to accept voluntary redundancy in exchange for those benefits. Other long-term employee benefits are employee benefits (other than post-employment benefits and termination benefits) that are not due to be settled within twelve months after the end of the period in which the employees render the related service. Vested employee benefits are employee benefits that are not conditional on future employment. Composite social security programmes are established by legislation and operate as multi-employer plans to provide postemployment benefits as well as to provide benefits that are not consideration in exchange for service rendered by employees. A constructive obligation is an obligation that derives from an entity’s actions where by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities and as a result, the entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities.
20
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.9 Employee benefits (continued) Short-term employee benefits Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within twelve months after the end of the period in which the employees render the related service. Short-term employee benefits include items such as: wages, salaries and social security contributions; short-term compensated absences (such as paid annual leave and paid sick leave) where the compensation for the absences is due to be settled within twelve months after the end of the reporting period in which the employees render the related employee service; bonus, incentive and performance related payments payable within twelve months after the end of the reporting period in which the employees render the related service; and non-monetary benefits (for example, medical care, and free or subsidised goods or services such as housing, cars and cellphones) for current employees. When an employee has rendered service to the entity during a reporting period, the entity recognise the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service: as a liability (accrued expense), after deducting any amount already paid. If the amount already paid exceeds the undiscounted amount of the benefits, the entity recognise that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and as an expense, unless another Standard requires or permits the inclusion of the benefits in the cost of an asset. The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs. The entity measure the expected cost of accumulating compensated absences as the additional amount that the entity expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The entity recognise the expected cost of bonus, incentive and performance related payments when the entity has a present legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made. A present obligation exists when the entity has no realistic alternative but to make the payments.
21
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.10 Provisions and contingencies Provisions are recognised when the municipality has a present or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the provision can be made. Provisions are reviewed at reporting date and adjusted to reflect the current best estimate. Where the effect is material, non-current provisions are discounted to their present value using a pre-tax discount rate that reflects the market's current assessment of the time value of money, adjusted for risks specific to the liability (for example in the case of obligations for the rehabilitation of land). The municipality does not recognise a contingent liability or contingent asset. A contingent liability is disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is disclosed where an inflow of economic benefits is probable. Future events that may affect the amount required to settle an obligation are reflected in the amount of a provision where there is sufficient objective evidence that they will occur. Gains from the expected disposal of assets are not taken into account in measuring a provision. Provisions are not recognised for future operating losses. The present obligation under an onerous contract is recognised and measured as a provision. A provision for restructuring costs is recognised only when the following criteria over and above the recognition criteria of a provision have been met: (a) The municipality has a detailed formal plan for the restructuring identifying at least: - the business or part of a business concerned; - the principal locations affected; - the location, function, and approximate number of employees who will be compensated for terminating their services; - the expenditures that will be undertaken; and - when the plan will be implemented; and (b) The municipality has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it. No obligation arises as a consequence of the sale or transfer of an operation until the municipality is committed to the sale or transfer, that is, there is a binding arrangement. After their initial recognition contingent liabilities recognised in entity combinations that are recognised separately are subsequently measured at the higher of: >the amount that would be recognised as a provision; and >the amount initially recognised less cumulative amortisation. Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 31.
1.11 Revenue from exchange transactions Revenue from exchange transactions refers to revenue that accrued to the municipality directly in return for services rendered / goods sold, the value of which approximates the consideration received or receivable. Service charges relating to refuse removal are recognised on a monthly basis in arrears by applying the approved tariff to each property that has improvements. Tariffs are determined per category of property usage, and are levied monthly based on the recorded number of refuse containers per property. Interest revenue is recognised on a time proportion basis. Revenue from the rental of facilities and equipment is recognised on a straight-line basis over the term of the lease agreement. Revenue arising from the application of the approved tariff of charges is recognised when the relevant service is rendered by applying the relevant gazetted tariff. This includes the issuing of licenses and permits. Revenue from the sale of goods is recognised when substantially all the risks and rewards in those goods is passed to the consumer.
22
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.11 Revenue from exchange transactions (continued) Measurement Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates. Sale of goods Revenue from the sale of goods is recognised when all the following conditions have been satisfied: the municipality has transferred to the purchaser the significant risks and rewards of ownership of the goods; the municipality retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue can be measured reliably; it is probable that the economic benefits or service potential associated with the transaction will flow to the municipality; and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Rendering of services When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the reporting date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: the amount of revenue can be measured reliably; it is probable that the economic benefits or service potential associated with the transaction will flow to the municipality; the stage of completion of the transaction at the reporting date can be measured reliably; and the costs incurred for the transaction and the costs to complete the transaction can be measured reliably. When services are performed by an indeterminate number of acts over a specified time frame, revenue is recognised on a straight line basis over the specified time frame unless there is evidence that some other method better represents the stage of completion. When a specific act is much more significant than any other acts, the recognition of revenue is postponed until the significant act is executed. When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable. Service revenue is recognised by reference to the stage of completion of the transaction at the reporting date. Stage of completion is determined by services performed to date as a percentage of total services to be performed. 1.12 Revenue from non-exchange transactions Revenue from non-exchange transactions refers to transactions where the municipality received revenue from another entity without directly giving approximately equal value in exchange. Revenue from non-exchange transactions is generally recognised to the extent that the related receipt or receivable qualifies for recognition as an asset and there is no liability to repay the amount. Revenue from property rates is recognised when the legal entitlement to this revenue arises. Collection charges are recognised when such a mounts are legally enforceable. Penalty interest on unpaid rates is recognised on a time proportionate basis. Revenue from public contributions and donations is recognised when all conditions associated with the contribution have been met or where the contribution is to finance property, plant and equipment, when such items of property, plant and equipment qualifies for recognition and first becomes available for use by the municipality. Where public contributions have been received but the municipality has not met the related conditions, a deferred income (liability) is recognised.Contributed property, plant and equipment is recognised when such items of property, plant and equipment qualifies for recognition and become available for use by the municipality. Revenue from the recovery of unauthorised, irregular, fruitless and wasteful expenditure is based on legislated procedures, including those set out in the Municipal Finance Management Act (Act No.56 of 2003) and is recognised when the recovery thereof from the responsible Councilors or officials is virtually certain.
23
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.12 Revenue from non-exchange transactions (continued) Fines Revenue from the issuing of fines is recognised when: it is probable that the economic benefits or service potential associated with the transaction will flow to the municipality; and the amount of the revenue can be measured reliably. The municipality has one type of fines:namely traffic fines. There is certainty regarding the probability of the flow of economic benefits or service potential in respect of fines as these fines are usually not given directly to an offender. Further legal processes have to be undertaken before the fine is enforceable. In respect of summonses the public prosecutor can decide whether to waive the fine, reduce it or prosecute for non-payment by the offender. An estimate is made for the revenue amount collected from fines and summonses based on past experience of amounts collected. Where a reliable estimate cannot be made of revenue from summonses, the revenue from summonses is recognised when the public prosecutor pays over to the entity the cash actually collected on summonses issued. Grants, Transfers and Donations Grants, transfers and donations received or receivable are recognised when the resources that have been transferred meet the criteria for recognition as an asset. A corresponding liability is raised to the extent that the grant, transfer or donation is conditional. The liability is transferred to revenue as and when the conditions attached to the grant are met. Grants without any conditions attached are recognised as revenue when the asset is recognised. 1.13 Investment income Investment income is recognised on a time-proportion basis using the effective interest rate method. 1.14 Retirement Benefits Post Retirement The municipality provides retirement benefits for its Employees and Councillors. Contributions are made to the Natal Joint Municipal Pension Fund to fund the obligations for the payment of retirement benefits in accordance with the rules of the defined benefit funds it administers. Contributions are recognised as an expense in the statement of Financial Performance. The funds are actuarially valued every three years using the discounted cash flow method. Any deficits identified by the actuary are recovered from participating municipalities in the form of surcharges added to the contributions which are recognised as an expense in the statement of Financial Performance in the year that they become payable.
1.15 Comparative figures Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year. 1.16 Unauthorised expenditure Unauthorised expenditure is expenditure that has not been budgeted, expenditure that is not in terms of the conditions of an allocation received from another sphere of government, municipality or organ of state and expenditure in the form of a grant that is not permitted in terms of the Municipal Finance Management Act (Act No.56 of 2003). Unauthorised expenditure is accounted for as an expense in the Statement of Financial Performance and where recovered, it is subsequently accounted for as revenue in the Statement of Financial Performance. 1.17 Fruitless and wasteful expenditure Fruitless and wasteful expenditure is expenditure that was made in vain and would have been avoided had reasonable care been exercised. Fruitless and wasteful expenditure is accounted for as expenditure in the Statement of Financial Performance and where recovered, it is subsequently accounted for as revenue in the Statement of Financial Performance.
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uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Accounting Policies 1.18 Irregular expenditure Irregular expenditure is expenditure that is contrary to the Municipal Finance Management Act (Act No.56 of 2003), the Municipal Systems Act (Act No.32 of 2000), the Public Office Bearers Act (Act No. 20 of 1998) or is in contravention of the Municipality’s supply chain management policy. Irregular expenditure excludes unauthorised expenditure. Irregular expenditure is accounted for as expenditure in the Statement of Financial Performance and where recovered, it is subsequently accounted for as revenue in the Statement of Financial Performance. 1.19 Conditional grants and receipts Revenue received from conditional grants, donations and funding are recognised as revenue to the extent that the municipality has complied with any of the criteria, conditions or obligations embodied in the agreement. To the extent that the criteria, conditions or obligations have not been met a liability is recognised. 1.20 Budget information Municipality are typically subject to budgetary limits in the form of appropriations or budget authorisations (or equivalent), which is given effect through authorising legislation, appropriation or similar.The budget covers the period from 1 July 2015 to 30 June 2016. General purpose financial reporting by municipality shall provide information on whether resources were obtained and used in accordance with the legally adopted budget. The annual financial statements and the budget are on the same basis of accounting therefore a comparison with the budgeted amounts for the reporting period have been included in the Statement of comparison of budget and actual amounts. The Statement of comparative and actual information has been included in the annual financial statements as the recommended disclosure when the annual financial statements and the budget are on the same basis of accounting as determined by National Treasury. 1.21 Related parties The municipality operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only entities within the national sphere of government are considered to be related parties. Management are those persons responsible for planning, directing and controlling the activities of the municipality, including those charged with the governance of the municipality in accordance with legislation, in instances where they are required to perform such functions. Close members of the family of a person are considered to be those family members who may be expected to influence, or be influenced by, that management in their dealings with the municipality. Only transactions with related parties not at arm’s length or not in the ordinary course of business are disclosed. 1.22 Cash and cash equivalents Cash and cash equivalents are measured at amortised cost. Cash includes cash on hand and cash with banks. Cash equivalents are short-term highly liquid investments that are held with registered banking institutions with maturities of three months or less and are subject to an insignificant risk of change in value. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and deposits held on call with banks
25
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand 2.
2016
2015
Property, plant and equipment 2016 Cost / Valuation
Land Buildings Leased office equipment Leased motor vehicles Infrastructure Community Other property, plant and equipment Work in progress Total
10 404 853 7 902 206 1 174 322 6 794 803 50 893 237 71 288 073 9 288 957 72 418 439 230 164 890
2015
Accumulated Carrying value depreciation and accumulated impairment (4 051 202) (992 425) (2 548 197) (13 099 241) (18 038 608) (7 486 423)
Cost / Valuation
10 404 853 3 851 004 181 897 4 246 606 37 793 996 53 249 465 1 802 534
10 404 853 7 385 974 1 174 323 5 973 059 29 880 140 62 052 394 8 533 433
72 418 439
55 468 424
(46 216 096) 183 948 794
180 872 600
-
26
Accumulated Carrying value depreciation and accumulated impairment (3 812 289) (734 111) (1 216 703) (11 433 331) (15 701 136) (7 017 888) -
10 404 853 3 573 685 440 212 4 756 356 18 446 809 46 351 258 1 515 545 55 468 424
(39 915 458) 140 957 142
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand 2.
Property, plant and equipment (continued)
Reconciliation of property, plant and equipment - 2016 Opening balance 10 404 853 3 573 685 440 213 4 756 356 18 446 809 46 351 258 1 515 544 55 468 424
Land Buildings Leased office equipment Leased motor vehicles Infrastructure Community Other property, plant and equipment Work in progress
140 957 142
Additions 516 232 821 744 755 523 47 198 791
Transfers
Depreciation
21 013 096 9 235 680 (30 248 776)
49 292 290
-
(238 911) (258 314) (1 331 494) (1 665 909) (2 337 471) (459 066) (6 291 165)
Impairment loss
(9 469) -
Total 10 404 853 3 851 006 181 899 4 246 606 37 793 996 53 249 467 1 802 532 72 418 439
(9 469) 183 948 798
Reconciliation of property, plant and equipment - 2015
Land Buildings Leased office equipment Leased motor vehicles Infrastructure Community Other property, plant and equipment Work in progress
Opening balance 10 404 853 3 811 182 675 077 1 884 324 14 501 219 34 827 945 1 982 683 27 457 555
Additions
Disposals
3 755 883 370 040 46 086 898
(200 982) -
95 544 838
50 212 821
(200 982)
A register containing the information required by section 63 of the Municipal Finance Management Act is available for inspection at the registered office of the municipality.
27
Transfers
Depreciation
4 794 904 13 281 125 (18 076 029) -
(237 497) (234 864) (883 851) (849 314) (1 757 812) (596 012) (4 559 350)
Impairment loss
(40 185) -
Total 10 404 853 3 573 685 440 213 4 756 356 18 446 809 46 351 258 1 515 544 55 468 424
(40 185) 140 957 142
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand 3.
2016
2015
Intangible assets 2016 Cost / Valuation
Computer software, other
2015
Accumulated Carrying value amortisation and accumulated impairment
162 978
(151 401)
11 577
Cost / Valuation
Accumulated Carrying value amortisation and accumulated impairment
162 978
(118 808)
44 170
Reconciliation of intangible assets - 2016
Computer software, other
Opening Amortisation balance 44 172 (32 595)
Total
Opening Amortisation balance 76 767 (32 595)
Total
11 577
Reconciliation of intangible assets - 2015
Computer software, other 4.
44 172
Receivables from Non-Exchange Transactions
Trade debtors Provision for Doubtful debts
12 198 805 (1 396 213)
9 522 137 (1 319 464)
10 802 592
8 202 673
1 891 403 80 288
1 854 236 37 167
1 971 691
1 891 403
Gross balances Rates
12 198 805
9 522 137
Less: Allowance for impairment Rates
(1 396 213)
(1 319 464)
Net balance Rates
10 802 592
8 202 673
Included in above is receivables from non-exchange transactions (taxes and transfers) Rates
12 198 805
9 522 137
12 198 805
9 522 137
Reconciliation of provision for doubtful debts of trade and other receivables Opening balance Provision for impairment
5.
Summary of Receivables
Gross balance
28
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand 5.
2016
2015
Summary of Receivables (continued)
Rates Current (0 -30 days) 31 - 60 days 61 - 90 days 91 - 120 days 121 - 365 days
521 419 339 503 218 314 308 529 10 811 040
606 874 483 652 431 870 297 890 7 701 851
12 198 805
9 522 137
Consumers Current (0 -30 days) 31 - 60 days 61 - 90 days 91 - 120 days 121 - 365 days
92 767 70 873 41 909 56 529 1 839 497
184 961 123 518 84 226 74 886 1 963 496
Less: Allowance for impairment
2 101 575 (716 575)
2 431 087 (887 827)
Summary of debtors by customer classification
1 385 000
1 543 260
Industrial/ commercial Current (0 -30 days) 31 - 60 days 61 - 90 days 91 - 120 days 121 - 365 days
225 763 68 132 44 692 53 947 1 798 660
222 227 173 173 165 752 43 389 904 336
Less: Allowance for impairment
2 191 194 (679 638)
1 508 877 (431 637)
1 511 556
1 077 240
202 889 200 499 131 711 198 054 7 172 882
199 686 186 961 181 891 179 615 4 834 019
7 906 035
5 582 172
Total Current (0 -30 days) 31 - 60 days 61 - 90 days 91 - 120 days 121 - 365 days
521 419 339 503 218 314 308 529 10 811 040
606 874 483 652 431 870 297 890 7 701 851
Less: Allowance for impairment
12 198 805 (1 396 213)
9 522 137 (1 319 464)
National and provincial government Current (0 -30 days) 31 - 60 days 61 - 90 days 91 - 120 days 121 - 365 days
10 802 592
29
8 202 673
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand 6.
2016
Other Receivables from non-exchange transactions
Sundry Debtors Traffic fines Allowance for impairment
7.
2015
596 907 3 740 750 (4 257 078)
605 000 9 554 513 (10 067 302)
80 579
92 211
3 099 196
3 956 920
202 483 8 121
3 159 025 29 423
210 604
3 188 448
VAT receivable
VAT VAT output is payable on the receipts basis and VAT input is paid over to SARS only once the payment is made to the supplier. 8.
Cash and cash equivalents
Cash and cash equivalents consist of: Cash and Bank Traffic Fines Account and Grant Cash Accounts
The municipality had the following bank accounts `
Account number / description ABSA BANK -Account TypeCheque-40-5385-7155 ABSA BANK -Account TypeTraffic 40-7854-4599 ABSA BANK - Account Type INEG-92-8652-5057 ABSA BANK - Account Type MIG-92-8651-3913 ABSA BANK - Account Type EPWP-92-8651-3769 ABSA BANK - Account Type FMG-92-8652-5340 ABSA BANK - Account Type MSIG-92-8651-3028 ABSA BANK - Account Type Call Account - 91-0739-9765 ABSA BANK -Account TypeTraffic 40-6506-2322 Total
Bank statement balances Cash book balances 30 June 2016 30 June 2015 30 June 2014 30 June 2016 30 June 2015 30 June 2014 200 983 3 160 220 134 126 202 483 3 159 025 131 429 167
12 394
14 090
167
12 384
14 090
1 920
1 815
1 178
1 920
1 815
1 178
1 509
1 427
1 357
1 509
1 427
1 357
1 077
1 964
2 819
1 077
1 964
2 819
1 211
1 146
1 151
1 211
1 146
1 151
1 367
1 292
1 449
1 367
1 292
1 449
-
-
2 431
-
-
2 431
870
9 385
-
870
9 385
-
209 104
3 189 643
158 601
210 604
3 188 438
155 904
30
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
Minimum lease payments due - within one year - in second to fifth year inclusive
1 612 532 3 390 880
2 092 152 3 905 017
less: future finance charges
5 003 412 (745 047)
5 997 169 (933 958)
9.
Employee benefit obligations
10. Finance lease obligation
Present value of minimum lease payments Present value of minimum lease payments due - within one year - in second to fifth year inclusive
Non-current liabilities Current liabilities
4 258 365
5 063 211
1 278 980 2 979 385
1 702 219 3 360 992
4 258 365
5 063 211
2 979 385 1 278 980
3 360 992 1 702 219
4 258 365
5 063 211
600 000 1 431 956 301 611 172 498 3 001 226 57 000
835 385 600 000 1 766 956 137 186 495 644 112 018 172 498 30 000 615 600
5 564 291
4 765 287
It is municipality policy to lease certain equipment and motor vehicles and equipment under finance leases. The average lease term was 5 years and the average effective borrowing rate was 10% (2015: 9%). Interest rates are fixed at the contract date. All leases have fixed repayments and no arrangements have been entered into for contingent rent. The municipality's obligations under finance leases are secured by the lessor's charge over the leased assets. . 11. Unspent conditional grants and receipts Unspent conditional grants and receipts comprises of: Unspent conditional grants and receipts Municipal Infrastructure Grant Spatial Development Framework Funding Housing Grant Library Grant Beach Access Upgrade Intergrated Development Plan Grant Development Planning and Shared Services Small Town Rehabilitation Schemes support programme
Movement during the year Balance at the beginning of the year Additions during the year Income recognition during the year
4 765 287 9 934 870 142 399 997 117 422 003 (141 600 993) (122 591 586) 5 564 291
31
4 765 287
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
11. Unspent conditional grants and receipts (continued) The nature and extent of government grants recognised in the annual financial statements and an indication of other forms of government assistance from which the municipality has directly benefited; and Unfulfilled conditions and other contingencies attaching to government assistance that has been recognised. See note for reconciliation of grants from National/Provincial Government.
12. Provisions Reconciliation of provisions - 2016 Opening Balance Leave Accrual
1 191 509
Reversed during the year (4 541)
Total
Additions
Total
1 186 968
Reconciliation of provisions - 2015
Leave Accrual
Opening Balance 1 000 090
191 419
1 191 509
13. Payables from exchange transactions Trade payables Other creditors Leave Accrual Retentions
14 388 484 1 462 560 1 186 968 8 125 673
11 989 387 706 113 1 191 509 5 042 584
25 163 685
18 929 593
1 075 018 239 253 148 289
416 932 124 425 164 756
1 462 560
706 113
Other creditors balance is made out of : Payroll Creditors Sundry Creditors Payment Received in Advance
The fair value of trade and other payables approximates their carrying amounts.
32
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
14. Property rates Rates received Property rates Less: Income forgone
10 970 780 (4 113 305)
10 399 564 (3 909 164)
6 857 475
6 490 400
193 868 000 95 165 000 141 833 000 42 250 000 588 256 000 122 209 000 7 213 000
193 868 000 95 165 000 141 833 000 42 250 000 588 256 000 122 209 000 7 213 000
Valuations Residential Commercial State Municipal (Ngonyama Trust) Agriculture Public Benefit Organisations Public Service Infrastructure
1 190 794 000 1 190 794 000 Valuations on land and buildings are performed every 4 years. The last general valuation came into effect on 1 July 2012. Interim valuations are processed on an annual basis to take into account changes in individual property values due to alterations and subdivisions. A general rate of 0.03611 is applied to property valuations to determine assessment rates. Rebates of 50% are granted to residential and state property owners. 15. Service charges Refuse removal
312 222
33
278 715
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
16. Government grants and subsidies Operating grants Equitable share Housing Grant Sports and Recreation Grant Municipal Systems Intergrated Grant Integrated Development Plan Grant Beach Access Upgrade Grant Small Town Rehabilitation Grant Library Grant Financial Management Grant Expanded Public Works Program Grant Intergrated National Electrification Grant Operational support for Thusong Schemes Support Programme Spatial Development Framework Funding ( SDF Funding) Capital grants Municipal Infrastructure Grant
93 949 000 335 000 930 000 112 018 194 033 28 774 860 186 1 800 000 1 000 000 9 000 000 1 460 997 558 600 -
67 324 724 247 528 934 000 323 689 240 000 559 710 1 800 000 1 455 000 5 113 096 6 539 003 239 400 198 821
110 228 608
84 974 971
31 372 385
37 616 615
31 372 385
37 616 615
141 600 993
122 591 586
Equitable Share In terms of the Constitution, this grant is used to subsidise the provision of basic services to indigent community members. All registered indigents receive a monthly subsidy of R 325 763- : which is funded from the grant. Municipal Infrastructure Grant Balance unspent at beginning of year Current-year receipts Conditions met - transferred to revenue Other
835 385 30 537 000 (31 372 385) -
6 198 724 38 452 000 (37 616 615) (6 198 724) 835 385
This grant was used to accelarate basic infrastructure backlogs for the benefit of poor households. The amount transfered to operating relates to projects budgeted for as capital and for financial reporting purposes the asset recognition criteria is met. The revenue recognised met the conditons of the grant. Financial Management Grant Current-year receipts Conditions met - transferred to revenue
1 800 000 (1 800 000) -
The grant was used to promote and support reforms in financial management through financial management internship and reforms programmes.The revenue recognised met the conditons of the grant.. Spatial Development Framework (SDF Funding) 34
1 800 000 (1 800 000) -
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
16. Government grants and subsidies (continued) Balance unspent at beginning of year Current-year receipts
600 000 -
600 000
600 000
600 000
1 766 956 (335 000)
1 766 956 -
Housing Grant Balance unspent at beginning of year Conditions met - transferred to revenue
1 431 956
1 766 956
This grant is unconditional and was used for human settlement operational expenses within the municipality (see note 11). Library Grant Balance unspent at beginning of year Current-year receipts Conditions met - transferred to revenue
137 186 723 000 (860 186) -
35 896 661 000 (559 710) 137 186
Conditions still to be met - remain liabilities (see note 11). Beach Access Upgrade Balance unspent at beginning of year Current-year receipts Conditions met - transferred to revenue
495 644 (194 033)
819 333 (323 689)
301 611
495 644
112 018 (112 018)
112 018 -
Conditions still to be met - remain liabilities (see note 11). Intergrated Development Planning Grant Balance unspent at beginning of year Conditions met - transferred to revenue
-
112 018
Conditions still to be met - remain liabilities (see note 11). Development Planning and Shared Services Balance unspent at beginning of year Conditions met - transferred to revenue
172 498 -
371 319 (198 821)
172 498
172 498
30 000 3 000 000 (28 774)
270 000 (240 000)
Conditions still to be met - remain liabilities (see note 11). Small Town Rehabilitation Grant Balance unspent at beginning of year Current-year receipts Conditions met - transferred to revenue 35
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
16. Government grants and subsidies (continued)
2015
3 001 226
30 000
Conditions still to be met - remain liabilities (see note 11). Intergrated National Electrification Grant Balance unspent at beginning of year Current-year receipts Conditions met - transferred to revenue
9 000 000 (9 000 000) -
113 096 5 000 000 (5 113 096) -
Conditions still to be met - remain liabilities (see note 11). The grant was used to address the electrification backlogs of occupied residential dwellings and the installation of bulk infrastructure, rehabilitation and refurbishment of electricity infrastructure in order to improve the quality of supply. The revenue recognised met the conditons of the grant. Municipal Systems Improvement Grant Current-year receipts Conditions met - transferred to revenue
930 000 (930 000) -
934 000 (934 000) -
Conditions still to be met - remain liabilities (see note 11). The grant was used for the implementation of revenue enhancement strategy, strengthening administrative systems for effective implementation of ward participation system, financial systems support and improving municipal audit outcome. The revenue recognised met the conditons of the grant.. Expanded Public Works Program Grant Current-year receipts Conditions met - transferred to revenue
1 000 000 (1 000 000) -
1 455 000 (1 455 000) -
The grant was used to expand employment creation efforts as a national priority through the use of labour intensive delivery methods within the municipality. The conditions of the grant were met. (see note 11). Operational Support Grant-Thusong Center Current-year receipts Conditions met - transferred to revenue Other
1 460 997 (1 460 997) -
4 000 000 2 539 003 (6 539 003) -
Conditions still to be met - remain liabilities (see note 11). Schemes Support Programs Grants Balance unspent at beginning of year Current-year receipts Conditions met - transferred to revenue
615 600 (558 600) 36
855 000 (239 400)
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
16. Government grants and subsidies (continued)
57 000
Conditions still to be met - remain liabilities (see note 11).
37
2015
615 600
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
17. General expenses Audit Committee Advertising Auditors remuneration Bank charges Cleaning Poverty Alleviation Internal Audit Fees Consulting and professional fees Consumables Publicity Donations Entertainment Mayoral Projects Stationery Insurance Community development and training Conferences and seminars Street Lighting Legal Fees Vehicles expenses Lease Rentals Traffic managers services Medical expenses Sampling Testing Fuel and oil Tools Postage and courier Printing and stationery Protective clothing Royalties and license fees Refreshments Staff welfare Subscriptions and membership fees Telephone and fax Training Travel - local Refuse Land usage management systems Electricity Sewerage and waste disposal Uniforms Archiving Community Services Relocation expenses Noise Pollutions and Disaster Funds HIV Awareness Development planning LED Expenses Grants and Donations Burials Sundries Civic Building Regulation
38
116 658 50 699 1 549 041 167 932 49 446 1 135 711 2 098 773 11 449 843 43 166 4 550 894 165 035 1 759 940 3 250 201 34 514 303 139 1 158 979 22 655 69 173 50 342 95 192 529 228 476 302 21 565 1 682 127 171 054 12 244 532 158 137 644 318 652 619 379 327 679 23 784 1 295 766 267 114 5 525 476 2 680 633 2 539 674 66 978 4 859 464 1 077 133 172 276 265 688 2 590 177 6 000 328 696 -
93 641 284 574 1 278 158 91 278 58 795 1 458 555 2 074 361 8 566 108 22 265 4 098 361 149 065 869 694 1 557 037 20 568 261 614 1 329 352 150 792 306 000 156 174 220 508 508 651 852 571 4 702 107 552 1 257 554 192 493 11 057 656 438 143 944 147 832 531 057 95 240 1 084 236 1 054 387 114 437 2 793 063 820 526 2 352 376 447 163 178 333 366 169 2 980 300 2 123 317 804 17 416 198 821 108 308 817 828 21 005 28 825 150 000
54 648 224
41 409 111
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
18. Employee related costs Basic Bonus Medical aid - company contributions SDL Pension Contributions Leave pay provision charge Overtime payments Night allowances Travel Allowances Housing benefits and allowances Funeral Scheme Group Life insurance Unemployment Insurance Bargaining Council
18 499 276 951 110 1 349 054 306 967 2 129 305 (4 541) 1 277 971 172 390 1 693 077 133 350 74 064 558 874 155 813 10 201
15 122 765 801 007 1 141 307 269 475 1 839 497 191 419 1 064 920 152 295 2 120 000 38 520 67 104 520 687 130 032 7 980
27 306 911
23 467 008
848 209 385 351 50 945
805 660 363 540 56 578
1 284 505
1 225 778
664 315 307 930 21 546 23 077
607 115 300 000 34 243 36 952
1 016 868
978 310
48 389 21 892 2 692
582 144 262 704 41 095
72 973
885 943
129 452 45 867 8 149
102 162 43 784 2 069
183 468
148 015
619 614 278 466 30 139
566 767 262 704 56 630
Remuneration of Municipal Manager Annual Remuneration Car Allowance Contributions to UIF, Medical and Pension Funds
Remuneration of Chief Finance Officer Annual Remuneration Car Allowance Contributions to UIF, Medical and Pension Funds Other
Remuneration of Corporate Services Director Annual Remuneration Car Allowance Contributions to UIF, Medical and Pension Funds
The Corporate Services director resigned on 31 July 2015. Remuneration of Technical Services Director Annual Remuneration Car Allowance Contributions to UIF, Medical and Pension Funds
The Technical Services Director was appointed on 01 May 2016 Remuneration of Community Services Director Annual Remuneration Car Allowance Contributions to UIF, Medical and Pension Funds 39
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
928 219
886 101
416 932 5 589 960 (5 520 983)
390 861 5 059 159 (5 450 020)
485 909
416 932
3 478 359 (2 931 076)
151 387 2 981 258 (3 132 645)
18. Employee related costs (continued)
PAYE,UIF & SDL Opening Balance Council Subscription Amount Paid -current
Pension and Medical Aid Opening Balance Council Subscription Amount Paid -current
547 283
-
633 540 5 340 817 2 356 539 108 000
734 040 5 211 185 1 974 698 -
8 438 896
7 919 923
3 681 600 80 288
9 458 197 37 166
3 761 888
9 495 363
703 609 1 158 622
111 119 932 705 515 746
1 862 231
1 559 570
6 291 167 32 595
4 559 350 32 595
6 323 762
4 591 945
9 469
40 185
19. Remuneration of councillors Cellphone Allowances Councillors allowances Travel Allowances Data Allowance
20. Debt impairment Contributions to debt impairment provision - fines Contributions to debt impairment provision - trade debtors
21. Interest Received Interest revenue Interest earned-Banks Interest earned-outstanding receivables Interest earned on investments
22. Depreciation and amortisation Property, plant and equipment Intangible Assets
23. Impairment of assets Impairments Property, plant and equipment
40
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
24. Finance costs Finance leases Other interest paid on bank accounts
312 159 20 302
299 633 9 970
332 461
309 603
1 549 041 (1 549 041)
1 278 158 (1 278 158)
25. Auditors' remuneration Current year Audit Fees Current year fees paid
-
-
462 000 329 365 651 113 1 281 672
122 325 738 498 500 403 816 927
2 724 150
2 178 153
4 116 037 1 038 420
450 617 739 743
5 154 457
1 190 360
35 483 528
46 087 622
26. Contracted services Sanitation Valuation Cleaning Services Security
27. Repairs and Maintanance Buildings Motor Vehicles
28. Cash generated from operations Surplus Adjustments for: Depreciation and amortisation Loss on sale of Assets Finance costs - Finance leases Impairment deficit Movements in provisions Other non-cash items Changes in working capital: Receivables from Non-Exchange Transactions Other receivables from non-exchange transactions Payables from exchange transactions VAT Unspent conditional grants and receipts
6 323 762 312 159 9 469 (4 541) 62 706
4 591 945 56 245 299 633 40 185 191 419 43 802
(2 676 668) 9 952 6 234 092 877 987 799 004
(1 763 874) (6 634) 8 328 624 (1 792 520) (5 169 583)
47 431 450
41
50 906 864
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
29. Commitments Authorised capital expenditure Already contracted for but not provided for Community Infrastructure
Not yet contracted for and authorised by accounting officer Property, plant and equipment The funding if commitments will mainly be obtained from Grants. 30. Risk management Credit risk Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade debtors. The municipality only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party. Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on an ongoing basis. If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilisation of credit limits is regularly monitored. Sales to retail customers are settled in cash or using major credit cards. Credit guarantee insurance is purchased when deemed appropriate.
31. Events after the reporting date Events after the reporting date are those events, both favourable and unfavourable, that occur between the reporting date and the date when the financial statements are authorised for issue. Two types of events can be identified (a)Those that provide evidence of conditions that existed at the reporting date (adjusting events after the reporting date); and (b)Those are indicative of conditions that arose after the reporting date (non-adjusting events after the reporting date). Adjusting events are recognised in the annual financial statement as at reporting date, whereas non-adjusting events are recognised. The redermacation of municipal boundaries resulted in Ntambanana Municipality being dissolved and wards redistributed to three municipalities, which are Umhlathuze, uMfolozi and Mthonjaneni municipality. On the 3rd of August 2016 local municipality elections took place and new council was formed which incorporate one ward from Ntamabanana Municipality due to demarcation processes. This is a non-adjusting events as it is indicative of events arose after the reporting date. As a result of the above events uMfolozi Municipality absorbed four(4) employees from Ntambanana Municipality. The population of the municipality will increase, resulting in increase in grant allocation.
42
6 845 148 2 892 798
8 520 421 18 390 174
9 737 946
26 910 595
24 049 000
33 382 000
uMfolozi Municipality
Annual Financial Statements for the year ended 30 June 2016
Notes to the Annual Financial Statements Figures in Rand
2016
2015
32. Unauthorised expenditure Opening Balance Current Year Unauthorised expenditure awaiting condonement
43 864 067 18 522 617
22 410 319 21 453 748
62 386 684
43 864 067
1 052 074
1 052 074
67 861 549 2 650 582
44 156 224 23 705 325
70 512 131
67 861 549
1 031 124 245 835 1 441 456
-
2 718 415
-
33. Fruitless and wasteful expenditure Opening Balance 34. Irregular expenditure Opening balance Add: Irregular Expenditure - current year Irregular expenditure awaiting condonement 35. Additional disclosure in terms of Municipal Finance Management Act Councillors' arrear consumer accounts The are no Councillors who had arrear accounts outstanding for more than 90 days at 30 June 2016: Supply chain management regulations In terms of section 36 of the Municipal Supply Chain Management Regulations any deviation from the Supply Chain Management Policy needs to be approved/condoned by the Municipal Manager and noted by Council. Current year deviations for 36 Current year-Deviations as a result of a Sole Supplier Current year- Emergency Quotations Current year- Only 2 Quotations Received
43
Appendix B June 2016
Analysis of property, plant and equipment as at 30 June 2016 Cost/Revaluation Accumulated depreciation Opening Balance Rand
Additions
Disposals
Transfers
Acqusitions
Rand
Rand
Rand
Rand
Correction of prior year error Rand
Closing Balance Rand
Opening Balance Rand
Acqusitions
Transfers
Depreciation
Impairment loss
Rand
Rand
Rand
Rand
Closing Balance Rand
Carrying value Rand
Land and buildings Land Buildings
10 404 853 7 385 974
516 232
-
-
-
-
10 404 853 7 902 206
(3 812 289)
-
-
(238 911)
-
(4 051 200)
10 404 853 3 851 006
17 790 827
516 232
-
-
-
-
18 307 059
(3 812 289)
-
-
(238 911)
-
(4 051 200)
14 255 859
Infrastructure Bus Terminals Lightning Pavements Road Signs Roads Storm water Drainage
2 989 926 701 118 48 417 10 800 25 924 634 205 246
-
-
5 751 668 15 261 428 -
-
-
8 741 594 701 118 48 417 10 800 41 186 062 205 246
(417 746) (128 285) (19 367) (6 480) (10 728 043) (133 409)
-
-
(270 371) (23 371) (1 613) (360) (1 359 932) (10 263)
-
(688 117) (151 656) (20 980) (6 840) (12 087 975) (143 672)
8 053 477 549 462 27 437 3 960 29 098 087 61 574
29 880 141
-
-
21 013 096
-
-
50 893 237
(11 433 330)
-
-
(1 665 910)
-
(13 099 240)
37 793 997
9 728 337 52 324 057
-
-
9 235 680
-
-
9 728 337 61 559 737
(1 191 159) (14 509 978)
-
-
(324 278) (2 013 193)
-
(1 515 437) (16 523 171)
8 212 900 45 036 566
62 052 394
-
-
9 235 680
-
-
71 288 074
(15 701 137)
-
-
(2 337 471)
-
(18 038 608)
53 249 466
Community Assets Sportfields and Stadiums Community Assets
Page 44
Appendix B June 2016
Analysis of property, plant and equipment as at 30 June 2016 Cost/Revaluation Accumulated depreciation Opening Balance Rand
Additions
Disposals
Transfers
Acqusitions
Rand
Rand
Rand
Rand
Correction of prior year error Rand
Closing Balance Rand
Opening Balance Rand
Acqusitions
Transfers
Depreciation
Impairment loss
Rand
Rand
Rand
Rand
Closing Balance Rand
Carrying value Rand
Leased Assets Office Equipments Vehicles
1 174 323 5 973 058
821 744
-
-
-
-
1 174 323 6 794 802
(734 111) (1 216 702)
-
-
(258 314) (1 331 494)
-
(992 425) (2 548 196)
181 898 4 246 606
7 147 381
821 744
-
-
-
-
7 969 125
(1 950 813)
-
-
(1 589 808)
-
(3 540 621)
4 428 504
55 468 424
47 198 791
-
(30 248 776)
-
-
72 418 439
-
-
-
-
-
-
72 418 439
55 468 424
47 198 791
-
(30 248 776)
-
-
72 418 439
-
-
-
-
-
-
72 418 439
2 148 397 1 909 627 631 298
259 818 495 703 -
-
-
-
-
2 408 215 2 405 330 631 298
(1 382 378) (1 244 278) (547 125)
-
-
(195 867) (179 026) (84 173)
(9 469) -
(1 578 245) (1 432 773) (631 298)
829 970 972 557 -
4 689 322
755 521
-
-
-
-
5 444 843
(3 173 781)
-
-
(459 066)
(9 469)
(3 642 316)
1 802 527
Assets Under Construction Assets under Construction
Other assets Equipment Furniture & Fittings Vehicles
Page 45
Appendix B June 2016
Analysis of property, plant and equipment as at 30 June 2016 Cost/Revaluation Accumulated depreciation Opening Balance Rand
Additions
Disposals
Transfers
Acqusitions
Rand
Rand
Rand
Rand
Correction of prior year error Rand
Closing Balance Rand
Opening Balance Rand
Acqusitions
Transfers
Depreciation
Impairment loss
Rand
Rand
Rand
Rand
Closing Balance Rand
Carrying value Rand
Total property plant and equipment Land and buildings Infrastructure Community Assets Leased Assets Assets Under Construction Other assets
17 790 827 29 880 141 62 052 394 7 147 381 55 468 424 4 689 322
516 232 821 744 47 198 791 755 521
-
177 028 489
49 292 288
-
21 013 096 9 235 680 (30 248 776) -
-
-
18 307 059 50 893 237 71 288 074 7 969 125 72 418 439 5 444 843
(3 812 289) (11 433 330) (15 701 137) (1 950 813) (3 173 781)
-
-
(238 911) (1 665 910) (2 337 471) (1 589 808) (459 066)
(9 469)
(4 051 200) (13 099 240) (18 038 608) (3 540 621) (3 642 316)
14 255 859 37 793 997 53 249 466 4 428 504 72 418 439 1 802 527
-
-
-
226 320 777
(36 071 350)
-
-
(6 291 166)
(9 469)
(42 371 985)
183 948 792
Agricultural/Biological assets Intangible assets Computers - software & programming
162 978
-
-
-
-
-
162 978
(118 807)
-
-
(32 595)
-
(151 402)
11 576
162 978
-
-
-
-
-
162 978
(118 807)
-
-
(32 595)
-
(151 402)
11 576
-
-
18 307 059 50 893 237 71 288 074 7 969 125 72 418 439 5 444 843 162 978
(3 812 289) (11 433 330) (15 701 137) (1 950 813) (3 173 781) (118 807)
-
-
(238 911) (1 665 910) (2 337 471) (1 589 808) (459 066) (32 595)
(9 469) -
(4 051 200) (13 099 240) (18 038 608) (3 540 621) (3 642 316) (151 402)
14 255 859 37 793 997 53 249 466 4 428 504 72 418 439 1 802 527 11 576
-
-
226 483 755
(36 190 157)
-
-
(6 323 761)
(9 469)
(42 523 387)
183 960 368
Total Land and buildings Infrastructure Community Assets Leased Assets Assets Under Construction Other assets Intangible assets
17 790 827 29 880 141 62 052 394 7 147 381 55 468 424 4 689 322 162 978
516 232 821 744 47 198 791 755 521 -
-
177 191 467
49 292 288
-
21 013 096 9 235 680 (30 248 776) -
Page 46
Appendix B Analysis of property, plant and equipment as at 30 June 2015 Cost/Revaluation Accumulated depreciation Opening Balance Rand
Additions
Acqusitions
Transfers
Revaluations
Restatements
Rand
Rand
Rand
Rand
Rand
Closing Balance Rand
Opening Balance Rand
Restatements Acqusitions Rand
Rand
Depreciation
Impairment loss
Rand
Rand
Closing Balance Rand
Carrying value Rand
Land and buildings Land Buildings
10 404 853 7 385 974
-
-
-
-
-
10 404 853 7 385 974
(3 574 792)
-
-
(237 497)
-
(3 812 289)
10 404 853 3 573 685
17 790 827
-
-
-
-
-
17 790 827
(3 574 792)
-
-
(237 497)
-
(3 812 289)
13 978 538
1 600 727 280 409 48 417 10 800 22 939 637 205 246
-
-
4 794 905 -
-
-
1 600 727 280 409 48 417 10 800 27 734 542 205 246
(337 934) (106 105) (17 753) (6 120) (9 992 958) (123 147)
-
-
(79 812) (22 180) (1 614) (360) (735 086) (10 262)
-
(417 746) (128 285) (19 367) (6 480) (10 728 044) (133 409)
1 182 981 152 124 29 050 4 320 17 006 498 71 837
25 085 236
-
-
4 794 905
-
-
29 880 141
(10 584 017)
-
-
(849 314)
-
(11 433 331)
18 446 810
44 884 026 3 887 243
-
-
7 440 031 5 841 094
-
-
52 324 057 9 728 337
(12 924 045) (1 019 280)
-
-
(1 585 933) (171 879)
-
(14 509 978) (1 191 159)
37 814 079 8 537 178
48 771 269
-
-
13 281 125
-
-
62 052 394
(13 943 325)
-
-
(1 757 812)
-
(15 701 137)
46 351 257
Infrastructure Bus Terminals Lighting Pavements Road Signs Roads Storm water Drainage
Community Assets Community Assets Sportsfields and stadium
Page 47
Appendix B June 2016
Analysis of property, plant and equipment as at 30 June 2015 Cost/Revaluation Accumulated depreciation Opening Balance Rand
Additions
Acqusitions
Transfers
Revaluations
Restatements
Rand
Rand
Rand
Rand
Rand
Closing Balance Rand
Opening Balance Rand
Restatements Acqusitions Rand
Rand
Depreciation
Impairment loss
Rand
Rand
Closing Balance Rand
Carrying value Rand
Leased assets Office Equipments Vehicles
1 174 323 2 217 176
-
-
3 755 883
-
-
1 174 323 5 973 059
(499 247) (332 852)
-
-
(234 864) (883 850)
-
(734 111) (1 216 702)
440 212 4 756 357
3 391 499
-
-
3 755 883
-
-
7 147 382
(832 099)
-
-
(1 118 714)
-
(1 950 813)
5 196 569
Assets under Construction Assets under Constructions
27 457 556
41 044 314
-
(18 076 030)
-
-
50 425 840
-
-
-
-
-
-
50 425 840
27 457 556
41 044 314
-
(18 076 030)
-
-
50 425 840
-
-
-
-
-
-
50 425 840
1 821 759 2 497 524 4 281 028
326 638 43 401 -
-
-
-
-
2 148 397 2 540 925 4 281 028
(1 209 325) (1 470 861) (3 937 440)
-
-
(173 052) (280 358) (142 603)
(40 185) -
(1 382 377) (1 791 404) (4 080 043)
766 020 749 521 200 985
8 600 311
370 039
-
-
-
-
8 970 350
(6 617 626)
-
-
(596 013)
(40 185)
(7 253 824)
1 716 526
Other assets Equipment Furniture and Fittings Vehicles
Page 48
Appendix B June 2016
Analysis of property, plant and equipment as at 30 June 2015 Cost/Revaluation Accumulated depreciation Opening Balance Rand
Additions
Acqusitions
Transfers
Revaluations
Restatements
Rand
Rand
Rand
Rand
Rand
Closing Balance Rand
Opening Balance Rand
Restatements Acqusitions Rand
Rand
Depreciation
Impairment loss
Rand
Rand
Closing Balance Rand
Carrying value Rand
Total property plant and equipment Land and buildings Infrastructure Community Assets Leased assets Assets under Construction Other assets
17 790 827 25 085 236 48 771 269 3 391 499 27 457 556 8 600 311
41 044 314 370 039
-
4 794 905 13 281 125 3 755 883 (18 076 030) -
-
-
17 790 827 29 880 141 62 052 394 7 147 382 50 425 840 8 970 350
(3 574 792) (10 584 017) (13 943 325) (832 099) (6 617 626)
-
-
(237 497) (849 314) (1 757 812) (1 118 714) (596 013)
(40 185)
(3 812 289) (11 433 331) (15 701 137) (1 950 813) (7 253 824)
13 978 538 18 446 810 46 351 257 5 196 569 50 425 840 1 716 526
131 096 698
41 414 353
-
3 755 883
-
-
176 266 934
(35 551 859)
-
-
(4 559 350)
(40 185)
(40 151 394)
136 115 540
Intangible assets Computers - software & programming
162 978
-
-
-
-
-
162 978
(86 212)
-
-
(32 595)
-
(118 807)
44 171
162 978
-
-
-
-
-
162 978
(86 212)
-
-
(32 595)
-
(118 807)
44 171
Total Land and buildings Infrastructure Community Assets Leased assets Assets under Construction Other assets Intangible assets
17 790 827 25 085 236 48 771 269 3 391 499 27 457 556 8 600 311 162 978
41 044 314 370 039 -
-
4 794 905 13 281 125 3 755 883 (18 076 030) -
-
-
17 790 827 29 880 141 62 052 394 7 147 382 50 425 840 8 970 350 162 978
(3 574 792) (10 584 017) (13 943 325) (832 099) (6 617 626) (86 212)
-
-
(237 497) (849 314) (1 757 812) (1 118 714) (596 013) (32 595)
(40 185) -
(3 812 289) (11 433 331) (15 701 137) (1 950 813) (7 253 824) (118 807)
13 978 538 18 446 810 46 351 257 5 196 569 50 425 840 1 716 526 44 171
131 259 676
41 414 353
-
3 755 883
-
-
176 429 912
(35 638 071)
-
-
(4 591 945)
(40 185)
(40 270 201)
136 159 711
Page 49
Appendix D June 2016
Segmental Statement of Financial Performance for the year ended Prior Year Current Year Actual Income Rand
Actual Expenditure Rand
Surplus /(Deficit) Rand
Actual Income Rand
Actual Expenditure Rand
Surplus /(Deficit) Rand
Municipality 131 824 157 10 621 643 1 226 946 143 672 746
21 357 953 (21 357 953) Executive & Council/Mayor and Council 36 807 619 95 016 538 Finance & Admin/Finance 7 468 461 3 153 182 Planning and Development/Economic Development/Plan 16 416 669 (16 416 669) Corporate Services 15 313 177 (14 086 231) Comm. & Social/Libraries and archives
1 011 148 106 643 362 41 976 258
28 842 529 (27 831 381) 42 396 145 64 247 217 25 410 686 16 565 572
5 237 988 880 389
8 511 168 (3 273 180) 15 434 852 (14 554 463)
97 363 879
155 749 145 120 595 380
46 308 867
Page 50
35 153 765
